Venture Capital Contracting in Theory and Practice: Implications for Entrepreneurship Research

24 Pages Posted: 25 Jan 2016

See all articles by Jens Burchardt

Jens Burchardt

Boston Consulting Group - Berlin

Ulrich Hommel

EBS Business School

Dzidziso Samuel Kamuriwo

City University London

Carolina Billitteri

Industrial Engineer

Date Written: January 2016

Abstract

This article provides a comprehensive theoretical and empirical literature review of venture capital contracts. This outlines the differences between theoretical and practical uses of contract designs; that is, (1) how does the choice of securities give rise to different adverse selection problems in terms of attracting different types of entrepreneurial companies; how does the choice of securities in conjunction with cash flow and control rights provisions affect (2) the effort levels by the entrepreneur and the investor; and (3) ultimately affect entrepreneurial outcomes. This article highlights the major discrepancies between theory and practice and points out potential avenues for further research.

Suggested Citation

Burchardt, Jens and Hommel, Ulrich and Kamuriwo, Dzidziso Samuel and Billitteri, Carolina, Venture Capital Contracting in Theory and Practice: Implications for Entrepreneurship Research (January 2016). Entrepreneurship Theory and Practice, Vol. 40, Issue 1, pp. 25-48, 2016. Available at SSRN: https://ssrn.com/abstract=2720657 or http://dx.doi.org/10.1111/etap.12104

Jens Burchardt (Contact Author)

Boston Consulting Group - Berlin

Dircksenstraße 41
Berlin, 10178
Germany

Ulrich Hommel

EBS Business School ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, 65189
Germany
+49 611 7102 1241 (Phone)
+49 611 7102 10 1241 (Fax)

Dzidziso Samuel Kamuriwo

City University London ( email )

Northampton Square
London, EC1V OHB
United Kingdom

Carolina Billitteri

Industrial Engineer

No Address Available
United States

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