This study examines the relationship between venture capitalist actions and the eventual disposition of a venture through an IPO, which is the most profitable exit strategy. The actions included in this study were ( 1) altering the amount of their investment; ( 2) securing a concentrated equity position; ( 3) diversifying their syndicate investments; and ( 4) introducing their investees to other sources of financing. After five years, this study found a positive relationship between IPO exit and ( 1) the amount of their investment; and ( 2) the diversification of their VC syndicate. However, it found only mixed results for ( 1) venture capitalist concentrated equity position; and ( 2) introductions to other sources of funding. Finally, implications for future research are discussed.
G24, G32, G12
Early-Stage Ventures, Startup, Valuation, Exit, Disposition
Busenitz, Lowell W. and Fiet, James O.
"The Effects of Early Stage Venture Capitalist Actions on Eventual Venture Disposition,"
Journal of Entrepreneurial and Small Business Finance:
2, pp. 97-114.
Available at: https://digitalcommons.pepperdine.edu/jef/vol5/iss2/2