Do Investors Manage US Ventures Less Intensively than Ventures in Other Regions of the World?

38 Pages Posted: 10 Jul 2006 Last revised: 3 May 2018

See all articles by Isin Guler

Isin Guler

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Anita M. McGahan

University of Toronto - Rotman School of Management

Date Written: June 1, 2006

Abstract

We examine differences in the risk-mitigation practices of venture-capital investors in managing both US and non-US ventures. The analysis focuses on actions taken by investors to manage the risks in venture firms. In particular, we evaluate whether investors disburse an average dollar to non-US ventures through more rounds, a shorter elapsed time between rounds, and broader syndication than to US ventures. After controlling for exogenous characteristics such as the industry affiliations of the ventures, the evidence is consistent with the finding that US ventures are not less risky than ventures from other parts of the world. Investors do not disburse funds to non-US ventures in more rounds, require less elapsed time between rounds, or syndicate more broadly than for US ventures. This may occur because investors select relatively higher quality ventures outside the US than in the US. The conclusions emphasize that the venture community has not developed fully in its understanding of international investing.

Keywords: Venture capital

Suggested Citation

Guler, Isin and McGahan, Anita M., Do Investors Manage US Ventures Less Intensively than Ventures in Other Regions of the World? (June 1, 2006). Available at SSRN: https://ssrn.com/abstract=913042 or http://dx.doi.org/10.2139/ssrn.913042

Isin Guler (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Anita M. McGahan

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-6188 (Phone)

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