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Investment, Duration, and Exit Strategies for Corporate and Independent Venture Capital-backed Start-ups

Bing Guo (), Yun Lou and David Perez-Castrillo

No 602, Working Papers from Barcelona School of Economics

Abstract: We propose a model of investment, duration, and exit strategies for start-ups backed by venture capital (VC) funds that accounts for the high level of uncertainty, the asymmetry of information between insiders and outsiders, and the discount rate. Our analysis predicts that start-ups backed by corporate VC funds remain for a longer period of time before exiting and receive larger investment amounts than those financed by independent VC funds. Although a longer duration leads to a higher likelihood of an exit through an acquisition, a larger investment increases the probability of an IPO exit. These predictions find strong empirical support.

Keywords: Venture Capital Funds; Start-ups; IPO; acquisition (search for similar items in EconPapers)
JEL-codes: G24 G32 G34 (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Investment, Duration, and Exit Strategies for Corporate and Independent Venture Capital‐Backed Start‐Ups (2015) Downloads
Working Paper: Investment, Duration, and Exit Strategies for Corporate and Independent Venture Capital-backed Start-ups (2012) Downloads
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