Entrepreneurs' Financing Choice between Independent and Bank-Affiliated Venture Capital Firms

Guillaume Andrieu and Alexander Groh ()
Additional contact information
Guillaume Andrieu: Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School, MRM - Montpellier Research in Management - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier
Alexander Groh: EM - EMLyon Business School

Post-Print from HAL

Abstract: This paper analyzes how the affiliation of a venture capital firm affects the deal terms for innovative entrepreneurial ventures. We develop a theory to explain the advantages of independent and bank-affiliated venture capital funds for entrepreneurs. We assume that independent venture capital firms provide better support quality while bank-affiliated firms are less financially constrained. The entrepreneur selects the optimal contract by trading-off these characteristics. The model allows several empirically testable predictions concerning the nature of projects financed by either type of venture capital firm. Entrepreneurs should seek capital from independent or affiliated venture capitalists contingent on the degree of sophistication of their project, their liquidation value, the importance of expected management support, and the remaining time to fundraising.

Date: 2012-12-01
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Published in Journal of Corporate Finance, 2012, 18 (5), 1143-1167 p. ⟨10.1016/j.jcorpfin.2012.07.001⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02312825

DOI: 10.1016/j.jcorpfin.2012.07.001

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().