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Monitoring Venture Capital Investments through Internal Control Prediction Markets

Max Werner (), Andrea Vianelli () and Mariusz C. Bodek ()
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Max Werner: Helmut Schmidt University, Hamburg, Postal: Holstenhofweg 85, 22049 Hamburg
Andrea Vianelli: K&L Gates LLP
Mariusz C. Bodek: Head and Co-Founder of comdirect Start-up Garage

No 165/2016, Working Paper from Helmut Schmidt University, Hamburg

Abstract: This paper offers a new perspective on a fundamental issue of venture capital investments, i.e., the so-called black box of involvement that concerns the paucity of relevant information necessary for venture capital managers to evaluate investments properly. Our paper discusses the application of an internal control prediction market as a monitoring instrument for venture capital investments. We therefore gather research literature and law and financial expertise to discuss uncertain business developments, missing data, and principal–agent conflicts. The results of our paper are expected to make significant contributions to the academic discussion, providing a foundation to open the black box of involvement that current venture capital managers face daily.

Keywords: Venture Capital; Venture; Capital Investments; Seed Capital; Monitoring; Managing; Black Box (search for similar items in EconPapers)
JEL-codes: G32 G34 G39 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2016-05-11
New Economics Papers: this item is included in nep-cfn
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