Mutual Funds as Venture Capitalists? Evidence from Unicorns

The role of boards of directors in corporate governance: a conceptual framework and survey

Sergey Chernenko, Josh Lerner and Yao Zeng

The Review of Financial Studies, 2021, vol. 34, issue 5, 2362-2410

Abstract: “Founder-friendly” venture financings and nontraditional venture investors have both flourished over the past decade. Using detailed contract data, we study open-end mutual funds investing in private venture-backed firms. We posit that conflicts between early-stage venture investors and liquidity-constrained later-stage ones influence the classic agency problems affecting entrepreneurs and investors. We find that mutual funds with more stable funding are more likely to invest in private firms and that financing rounds with mutual fund participation have stronger redemption, stronger IPO-related rights, and less board representation. These findings are consistent with our conceptual framework.

JEL-codes: G23 G24 G32 G34 K12 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (16)

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Working Paper: Mutual Funds as Venture Capitalists? Evidence from Unicorns (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:rfinst:v:34:y:2021:i:5:p:2362-2410.

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