Venture Capital: A Model of Search and Bargaining

Rafael Silveira and Randall Wright
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Rafael Silveira: J. P. Morgan

Review of Economic Dynamics, 2016, vol. 19, 232-246

Abstract: We develop a model of the venture capital market, focusing on the search process that matches capitalists with entrepreneurs, and the bargaining problem that splits the surplus. Venture capitalists go through the following cycle: (1) fund raising; (2) search for a project/partner; (3) implementation; (4) exit. We study project selection when there are match-specific costs and returns; decisions to enter the market in the first place; investments during implementation; and fund size. The model is consistent with the stylized facts, and provides a tractable framework for formalizing purely descriptive studies of this market. (Copyright: Elsevier)

Keywords: Venture capital; Search; Bargaining (search for similar items in EconPapers)
JEL-codes: D83 G24 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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DOI: 10.1016/j.red.2015.06.002

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