Determinants of required return in venture capital investments:A five country study
Philippe Desbrières (),
Koen De Waele,
Harry Sapienza and
Working Papers CREGO from Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations
Using two complementary theoretical perspectives, we develop hypotheses regarding the determinants of the return required by venture capitalists and test them on a sample of over 200 venture capital companies (VCCs) located in five countries. Consistent with resource based theory, we find that early stage specialists require a significantly higher return than other VCCs when investing in later stage ventures. Consistent with financial theory, we find that acquisition /buyout specialists require a significantly lower return than other VCCs when investing in expansion companies. Furthermore, in comparison to specialists, highly stage-diversified VCCs require a significantly higher return for early stage investments. Independent VCCs require a higher rate of return than captive or public VCCs. In general, higher required returns are associated with VCCs providing more intensity of involvement, having shorter expected hold-ing period of the investment, and being located in the US or UK (in comparison to those in France, Belgium, and the Netherlands).
Keywords: required return; venture capital; investments (search for similar items in EconPapers)
JEL-codes: G24 G34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-ent and nep-mfd
Note: article publié dans Journal of Business Venturing, vol.17, n°4, juillet 2002, p.291-312
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Published in Journal of Business Venturing, vol.17, n°4, juillet 2002, p.291-312
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Journal Article: Determinants of required return in venture capital investments: a five-country study (2002)
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Angèle Renaud, CREGO, 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France
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