The Determinants of Venture Capital Portfolio Size: Empirical Evidence

47 Pages Posted: 5 Nov 2001

Multiple version iconThere are 3 versions of this paper


This paper explores factors that affect portfolio size among a sample of venture capital financing data from 214 Canadian venture capital funds. The data encompass a variety of venture capital funds (private independent limited partnerships, corporate, government, labour-sponsored), and a variety of entrepreneurial firms. In addition to direct measures of investment costs, a number of proxies for the non-pecuniary costs and benefits of having additional entrepreneurial firms in a venture capital portfolio are considered. Four categories of factors affect portfolio size: (1) the venture capital funds' characteristics, including the type of fund, fund duration, fundraising, and the number of venture capital fund managers; (2) the entrepreneurial firms' characteristics, including stage of development, technology, and geographic location; (3) the nature of the financing transactions, including staging, syndication and capital structure; and (4) market conditions. We assess the statistical and economic significance of these variables, and test for the presence of increasing versus decreasing returns to scale in the factors that affect the number of investee entrepreneurial firms in a venture capital portfolio.

Keywords: Venture Capital Portfolio, Returns to Scale, Entrepreneurship

JEL Classification: G24, G28, G32, G38

Suggested Citation

Cumming, Douglas J., The Determinants of Venture Capital Portfolio Size: Empirical Evidence. Journal of Business, Vol. 79, pp. 1083-1126, 2006, Available at SSRN: or

Douglas J. Cumming (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States


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