The Effects of Early Stage Venture Capitalist Actions on Eventual Venture Disposition

Lowell W. Busenitz and James O. Fiet
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Lowell W. Busenitz: University of Houston
James O. Fiet: University the Pacific

Journal of Entrepreneurial Finance, 1996, vol. 5, issue 2, 97-114

Abstract: This study examines the relationship between venture capitalist actions and the eventual disposition of a venture through an IPO, which is the most profitable exit strategy. The actions included in this study were ( 1) altering the amount of their investment; ( 2) securing a concentrated equity position; ( 3) diversifying their syndicate investments; and ( 4) introducing their investees to other sources of financing. After five years, this study found a positive relationship between IPO exit and ( 1) the amount of their investment; and ( 2) the diversification of their VC syndicate. However, it found only mixed results for ( 1) venture capitalist concentrated equity position; and ( 2) introductions to other sources of funding. Finally, implications for future research are discussed.

Keywords: Early-Stage Ventures; Startup; Valuation; Exit; Disposition (search for similar items in EconPapers)
JEL-codes: G12 G24 G32 (search for similar items in EconPapers)
Date: 1996
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Citations: View citations in EconPapers (2)

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