Success is good but failure is not so bad either: Serial entrepreneurs and venture capital contracting
Journal of Corporate Finance, 2019, vol. 58, issue C, 624-649
I analyze prior entrepreneurship as a determinant of financial contracting with venture capitalists and find more company-favorable contracts in startups founded by serial entrepreneurs. Repeat founders and other insiders retain greater board control and also suffer less equity dilution in their dealings with VCs. Second, serial founders retain their CEO positions more often. Third, startups founded by serial entrepreneurs obtain higher valuations at VC funding although this finding is confined to previously successful founders who also obtain the best contracts. Interestingly these results obtain despite poorer performance of such startups and VCs funding them sooner. Overall, even previously unsuccessful serial entrepreneurs receive better deal terms than novice founders, consistent with entrepreneurial learning being an important factor in fostering future entrepreneurship.
Keywords: Venture capital; Financial contracting; Serial entrepreneurship (search for similar items in EconPapers)
JEL-codes: G24 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:58:y:2019:i:c:p:624-649
Access Statistics for this article
Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter
More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Haili He ().