Efficient venture capital financing combining debt and equity

Leslie Marx

Review of Economic Design, 1998, vol. 3, issue 4, 387 pages

Abstract: I present a model of venture capital contracting in which contracts that involve a mixture of both debt and equity are efficient and dominate pure-equity and pure-debt financing. The optimal contract balances the venture capitalist's incentive to intervene in the project and the entrepreneur's desire for control.

JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 1998-09-16
Note: Received: 9 September 1997 / Accepted: 3 April 1998
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