More than Money: Venture Capitalists on Boards

Natee Amornsiripanitch, Paul Gompers and Yuhai Xuan

The Journal of Law, Economics, and Organization, 2019, vol. 35, issue 3, 513-543

Abstract: We explore patterns of board structure and function in the venture capital industry, identifying factors that influence whether venture capitalists receive a board seat and whether they take action to help portfolio companies in which they invest. In a comprehensive sample of US-based and non-US-based companies, we find that a venture capital firm’s prior relationship with the founder, lead investor status, track record, network size, and geographical proximity to the portfolio company are positively correlated with its likelihood of taking a board seat in an investment round. When venture capital investors serve on the board, portfolio companies tend to recruit managers and board members from these investors’ network and are more likely to exit via relationship-based acquisitions. These patterns are particularly strong for successful and well-connected venture capitalists on the board.

JEL-codes: G24 G30 G34 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (20)

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