Start-Up Investment With Scarce Venture Capital Support

Christian Keuschnigg

University of St. Gallen Department of Economics working paper series 2002 from Department of Economics, University of St. Gallen

Abstract: Venture capitalists, representing informed capital, screen, monitor and advise start-up entrepreneurs. The paper reports three new results on venture capital (VC) finance. First, there is an optimal number of companies in the VC portfolio with a trade-off between the number of companies and the value of managerial advice. Second, dilution of advice plays an important role in the adjustment of the VC industry. Third, as a welfare result, a VC tends to provide too little advisory effort but takes too many companies to be advised. Testable implications are discussed.

Keywords: Venture capital; company portfolio; managerial advice; economic rents (search for similar items in EconPapers)
JEL-codes: D82 G24 G32 L19 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2002-01
New Economics Papers: this item is included in nep-ent
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Citations: View citations in EconPapers (3)

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http://ux-tauri.unisg.ch/RePEc/usg/dp2002/dp0203keuschnigg_ganz.pdf (application/pdf)

Related works:
Journal Article: Start-up investment with scarce venture capital support (2004)
Working Paper: Start-Up Investment with Scarce Venture Capital Support (2001)
Working Paper: Start-up Investment With Scarce Venture Capital Support (2001)
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