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date: 22 February 2019

(p. 997) Index

(p. 997) Index

Abhor, Joshua
access to capital in emerging markets, 971
access to information in emerging markets, 971
government attention to SMEs, 972
acquisitions
as exits, 41, 251, 408
as explorative learning, 197, 627
asset, 496
boutiques, mergers and, 22
compared to IPOs, 640
future, 64
IPO firms and, 647,
technology-driven, 640
VC control rights and, 222 See also mergers and acquisitions; venture capital
Admati, Anat R.
agency problems affect monitoring and staging, 354
contracting from agency theory perspective, 423
entrepreneurs know more about the company than VCs do, 356
information asymmetry, studies of, 356
performance-related functions of VC syndication, 404 table 13.1
preventing abuse of information asymmetrics, 406
staged financing, 383
syndication and strategic pricing issues, 305
VCs syndicate investments, 757
adverse selection
banks and, 380
contractual features and, 311
entrepreneurs seeking VC investment and, 303, 369.n1, 379
firms entering alliances and, 238
less well-known entrepreneurs and, 357
mitigation of, 642
patent value funds and, 658
sale of shares and, 515
screening by investors and, 381, 630
second-stage agency relationship and, 629
selection criteria used by general partners and, 30
strategic alliances and, 653
syndication and, 549
technology-intensive firms and, 512 See also agency problems; asymmetric information; moral hazards;
Agarwal, Rajshree
agglomeration and entrepreneurial clusters, 902
firm failure as benefit, 198
higher underpricing in cold market, 784
long-term performance of VC-backed and non-VC-backed IPOs, 777
overvaluation of IPOs at initial stage, 781
spin-outs, 159
studies of VC participation and firm performance, 763 table 25.2
agency problems
angel investors and, 721
as an inherent problem in VC investments, 629
compensation packages to minimize, 630
contingent compensation and, 357
contractual features and, 261, 502, 512
convertible securities and, 630
corporate venture capital and, 650
finance decisions and, 379, 380, 395, 545
horizontal, 66
in German VC activity, 571–601
in technology-driven deals, 656, 657
jointly appointed board members and, 495
mitigating, 9, 31, 219, 364, 387, 629, 631
monitoring and, 354, 357, 364
opportunism and, 356, 362
postinvestment involvement of VCs and, 723
security design and, 322.n7, 357
solutions to, 798
staging decisions and, 354, 369, 374
strategic alliances and, 654–655
value added by VC as amelioration of, 752
VC disinvestment and, 545
Aghion, Philippe
cash flow and control rights in VC contracts, 497
control rights in PIPE investment, 261
CVC efforts, 201
German VCs, 572
VC contract theory, 504.n7
Aizenman, Joshua
growth of VC financing, 864–865
VC activity as a global movement, 355
Akerlof, George A.
adverse selection, 512
(p. 998) effects of financial crisis, 55, 56
immeditate costs and delayed benefits, 519
Alemany, Luisa, 8
maximizing social return on investment, 276, 298.n2
philanthropic VC differs from socially responsible investments and private equity, 279
Alkan, S
bankruptcy laws and VC activity, 852
capital gain taxes, 832
entrepeneurship and VC development, 838
European VC, 834
labor market rigidities, 839
legal systems and VC investments, 851, 853
politics create uncertainty, 841
VC activity affected by political and social conditions, 826
VC and interest rate level, 834
VC development and political and social factors, 845
VC effect on R&D, 838
VC supply and demand, 833
Allen, T. J.
Not Invented Here syndrome, 164, 172 table 5.2, 198
Amit, Raphael
adverse selection, 512
information asymmetry in VC investments, 354, 369.n1
information proessing of VCs and angels, 381
internal venturing, 158
uncertainty in VC market, 369
VC unfamiliarity with portfolio industry, 757
VCs and due diligence, 378
angel investors, 721–750
attributes of, 731–737, 732–733 table 24.2
investment behavior of, 731–737, 735 table 24.3
postinvestment involvement of, 723–730
activities cited, 726–729 table 24.1
value added by, tests for, 741 table 24.4
Antonczyk, Ron Christian
German VCs, 572, 573, 575
VC contracts in Germany and the U. S., 575
VC contracts, 9
Armour, John
bankruptcy laws and VC activity, 852, 858
bankruptcy laws, 22, 56
capital gain taxes, 23, 832
crowding-out effect, 827
effects of regulatory framework on VC activity, 57
infrastructure encouragement of VC activity, 800
public programs and VC activity, 23, 25
stimulating economic growth, 211
taxes and VC activity, 802
VC and regional economy studies, 805 table 26.2
VC supply and demand, 833
Armstrong, Christopher
literature on entrepreneurial firms and financial statement information, 688 table 23.1
revenue forecasts of venture-backed firms, 694
VC-backed firms’ equity values and returns, 687
Arrow, Kenneth Joseph
commitment devices, 521
human capital and biotech firms, 132
information disclosure to VCs, 369.n1
information processing, 525
structuring VC agreements, 357
asymmetric information, 512
agency problems and, 356,
and PIPE investing, 247–248, 261
and SMEs, 330, 373
at the intermediate stage, 680
collateral as mitigating factor to, 387
finance decisions and, 374, 391, 394, 395
intermediation challenges and, 968
profitability and, 379–382
reputation of VC, affecting, 61
Audia, P. G.
decision to pursue entrepreneurship, 798
legal environment for VC activity, 800, 801
social capital, 803
spin-offs, 794–795
Audretsch, David B.
agglomeration and entrepreneurial clusters, 902
development of clusters of VCs and entrepreneurs, 932
entrepeneurship and VC development, 838
lact of VC funding and negative effect, 56
positive impact of VC funding, 38
VC activity depends on conditions within the country, 838
Babcock-Lumish, Terry L.
nonlocal investments, 902
relational financing and geographic location, 941
VC investment literature summary, 942table 31.1
Baeyens, K.
characteristics sought by VCs in portfolio firms, 329
leverage ratios of VC- and non-VC-backed firms, 338
VC- and non-VC-backed firms and growth, 333
Baker, Malcolm
capital structure of firms, 350.n1
corporate governance, 66
fee-for-equity arrangements, 607, 621.n1
investment inefficiency due to fear of failure, 305
IPOs and VC/lawyer involvement, 620
natural logarithm of sales, 336
positive impact of VC funding,, 62
profitability, 337
reputation of VCs, 64, 68 table 3.1, 83, 84
banking
and asymmetric information, 380, 387
as investment for VCs, 258
as prior experience of VCs, 132, 140
(p. 999) “captured borrowers” and, 322
commercial
in Korea, 785
in Poland, 973, 974, 976–979, 977–978 table 32.2, 983, 984, 987
compared to VC activities, 816
investment, league tables, 85.n4
shadow, 40
stock market-based financial system vs. bank-based capital market, 767, 768
bankruptcy
as an exit, 408
background of VC and likelihood of, 132
debt and, 330, 383, 384
financial contracting and, 484, 503
financial crisis and, 37, 38, 40
in Germany, 218
laws, 22, 56, 57, 58, 800, 802, 826, 852, 858, 859
redemption rights and, 494
risk of, 387, 391, 392, 394, 395, 396
securitization transactions based on intellectual property and, 660
start-ups’ risks of, 41
VC-backed companies and, 379, 382–384
Barney, Jay
corporate venture capital, 653, 654
entrepreneurial overconfidence, 323.n13
entrepreneurs and VC advice, 724
post-investment activities studies, 726 table 24.1
resource-based view, 131, 134
VC post-investment involvement and value added, 722, 724
Barry, Christopher B.
domestic lead investor, 360
issuer age, 78
literature on going public, 644 table 21.1
measure of VC backing, 771
studies of VC participation and firm performance, 761 table 25.2
VC measure of success, 902
VCs add value to entrepreneurial firms, 642
VCs with IPO experience, 757
Bascha, Andreas
control rights for VCs, 630
differences in VC from U. S. to Europe, 630
exit strategies, 545
VC contracts in Germany and the U. S., 575
Basu, Sandep
CVC studies, 172 table 5.2, 175,176, 177,
early-stage financing and deal terms, 224, 234
likelihood of companies creating CVC programs, 221
Baum, Joel A. C.
issuance of additional equity and firm stability, 394
post-investment activities studies, 726 table 24.1
VC adds value to new ventures, 724
VCs as scouts and coaches, 30
Beatty, R.
dummy variable for lead VC in IPO, 771
investment banks and M&A advisory work, 62
ranking law firms, 85 n.8
studies of VC participation and firm performance, 759 table 25.2
underwriter reputation, 77
Beck, T.
improved financial intermediation and economic growth, 794
legal systems and financial development, 849, 852
Becker, Gary S.
human capital, 131, 148
information processing, 525
standard agency models, 518
Beckman, C. M.
human capital of VCF founders, 140, 150
interactions with other firm activities, 188
venture capital funds, 134
Bengtsson, Ola
automatic conversion in VC contracts, 504.n11
California style VC contracts, 500, 501
cash flow contingencies and control rights in VC contracts, 484, 487, 489, 497, 499
corporate governance, 187
CVC studies, 172 table 5.2
data gathering on VC contracts, 484
distance between VC and portfolio firm affects contract terms, 499
due diligence and contracts, 311
financial contracting, 599
financial contracting, 9
interaction between VC-backed firms, venture funds, and entrepreneurs, 687
issuer characteristics in VC contracts, 498
law firm characteristics and VC contracts, 500, 504.n9
literature on entrepreneurial firms and financial statement information, 693 table 23.1
post-investment relationship 185
protective provisions in VC contracts, 496
regional differences in VC contracts, 941
relational financing and geographic location, 941
renegotiations in VC contracts, 503
time-series changes in VC contracts, 501
VC contracts in Germany and the U. S., 575
VC contracts study, 480 table 16.1, 504.n13, 505.n14
VC credentials, 483
VC investment literature summary, 942 table 31.1
VC monitoring can replace some contract term
Benson, David
CVC investment and acquisitions activity, 192
CVC studies, 172 table 5.2
M&A activity, 188, 190
Bergemann, D.
capital structure of VC-backed firms, 330
syndication and information asymmetry, 901
VC and local bias when investing alone, 926
(p. 1000) Berger, Allen N.
bank financing terms and information asymmetry, 380, 387
effect of lack of longitudinal data on private companies, 378
entrepreneurs’ needs for financing, 373
financing needed for high-tech and R&D-intensive industries, 629
funding of SMEs, 330
historical financial information and bank financing, 380, 387
information asymmetry and access to financing, 379
sources of external financing for entrepreneurial firms, 544
sources of small business financing, 682.n1
Bernstein, Lisa
lawyers as VCs, 610, 611, 612
lawyers’ involvement in drafting VC agreements, 212
role of Silicon Valley lawyers, 609, 612
Bertoni, Fabio
new technology firms performing better with conventional VC financing, 222
VC encourages innovation and patents, 637
Bessler, Wolfgang
acquisitions of IPO firms, 647
German VC-backed IPOs, 642, 643
hot and cold markets, 642
innovation, 9
IPO waves in Europe, 640
literature on going public, 644 table 21.1
relative shares of venture-backed IPOs in U. S. and Europe, 638
sequential exit strategies, 647, 648
Biekpe, Nicholas
access to capital in emerging markets, 971
access to information in emerging markets, 971
government attention to SMEs, 972
Bienz, Carsten
exit rights, 545
German VCs, 572
secondary purchases, 641
staged financing, 545
use of convertible stocks, 630
VC contracts in Germany and the U. S., 575
Birkinshaw, Julian
CVC and developing business relationships, 178
CVC program longevity, 204.n37
CVC selection, 184
CVC studies, 172 table 5.2, 200
governance structures, 182, 185
open innovation, 164
ownership of CVC ventures, 181
post-investment involvement, 186, 187
Black, Bernard S.
advantages of stock market-based financial system on IPO exit, 767
economic benefits of VC, 824
financial market infrastructure, 22
governance concerns in emerging markets, 971
labor market restrictions and VC activity, 23
market strength and VC fundraising, 41, 141
U. S. and strong IPO market, 833
U. S. stock market supporting VC market, 642
VC exits, 21
VC fund performance in EU and U. S., 864, 877
VCs are drivers of innovation, 767
Block, Joern H.
financial crisis and VC activity, 7, 38, 45, 57
data sources, 42
Block, Zenas
advantages of CVC, 193
CVC and compensation structures, 181
CVC structure, 161
CVC studies, 172 table 5.2
goals of CVC, 173
Bolton, Patrick
cash flow and control rights in VC contracts, 497
control rights in PIPE investment, 261
VC contract theory, 504.n7
Bonini, Stefano
bankruptcy laws and VC activity, 852
capital gain taxes, 832
entrepeneurship and VC development, 838
European VC, 834
international VC, 10
labor market rigidities, 839
legal systems and VC investments, 851, 853
politics create uncertainty, 841
VC activity affected by political and social conditions, 826
VC and interest rate level, 834
VC development and political and social factors, 845
VC effect on R&D, 838
VC supply and demand, 833
Boocock, G.
evaluation of business plans and their financial projections, 319
importance of business plans, 317
reasons for rejecting proposals, 308
Boschee, J.
application of business practices to nonprofit organizations, 277
nonprofits developing innovative approaches to earn income, 276
Bottazzi, A.
legal systems and VC deals, 852, 853
VC and government programs for VC activity, 826
Bottazzi, Laura
advice and support of VC in firms, 682.n2
commercialization of new technologies in U. S. and in Europe, 791
contractual terms to deal with agency problems, 722
CVC studies, 172 table 5.2
drying up of VC market, 56
(p. 1001) finance decisions study, 377 table 12.1
financial contracting, 571
impact of VC funding, 38
legal system variables, 866
post-investment relationship, 185, 186, 187
post-investment activities studies, 726 table 24.1
VC adds value to new ventures, 724
VC encourages innovation and patents, 637
VC fund performance in EU and U. S., 864, 877
Brachtendorf, German
finance decisions study, 377 table 12.1
investment staging, 374
staged financing mitigates moral hazard, 381
Brander, James A.
benefits of syndication, 547
IPO as success, 364
lawyers as VCs, 612
motives for syndication, 542
performance-related functions of VC syndication, 404 table 13.1
sharing and management of experience, 407
syndication as an asset for portfolio firms, 363
syndication increases value-added benefits of VC, 604, 608
syndication of VCs, 611
VC deal making process. 305, 306
VC screening role, 683.n5
Brau, James C.
acquisitions of IPO firms, 647
M&A and market success, 658
no difference between VC- and non-VC-backed firm performance, 724
sequential exit strategies, 647, 648, 661.n2
trade sales, 640
valuation of IPO shares, 640
VC reputation, 66
Brav, Alon
literature on going public, 645 table 21.1
market capitalization of the IPO issuer, 78, 79
stock returns of VC- and non-VC-backed IPOs, 86 n.12
studies of VC participation and firm performance, 758–759 table 25.2
VCs add value to entrepreneurial firms, 642
Brettel, Malte
VC contract design in Germany, 9
VC contracts in Germany and the U. S., 575, 579
Brophy, David
hedge funds investing in PIPEs, 247
returns to VIPE issuers, 266
U. S. PIPE market, 270.n2
Broughman, Brian
appointment of board members and agency problems, 495
contractual cash flow contingencies, 487
data gathering on VC contracts, 484
renegotiations in VC contracts, 503
VC contracts study, 480 table 16.1, 499
VC exits as IPOs and acquisitions, 66
Bruno, Albert V.
assessment criteria, 312
firms and failure to obtain VC financing, 318
investment strategies of VCFs, 133
post-investment activities studies, 728 table 24.1
VC post-investment involvement (PII), 722, 723
Bruns, Volcker
access to finance for SMEs, 966
banks and start-up financing, 38
banks as source of finance for SMEs, 967
gap in connecting with investors, 968
Burton, D. M.
human capital of VCF founders, 134, 140, 150
Busenitz, Lowell
postinvestment activities studies, 726 table 24.1
VC postinvesetment involvement and value added, 722, 724
buybacks
definition of, 1
as exit from investment, 41
buyout investments, 1, 2
Bygrave, William D.
benefits of syndication, 547
data sources, 42, 201.n6
performance-related functions of VC syndication, 403 table 13.1
postinvestment activities studies, 728 table 24.1
syndicate members as business partners, 307
syndication facilitates news of deals, 307
VC funding and firm growth, 38
VC investment and uncertainty, 355, 356
VC postinvestment involvement (PII), 723
VC rates of return, 474.n1
VC syndication regionally based, 304
call option, 660
and payout of the VC, 438
capital
allocation, 16, 182
appreciation, 173
base, 425
calls, 41, 202.n16
captive funds, 31
channeling via funds of funds, 16
committed, 18, 19–20 table 1.1, 31
cost of, 450, 451, 452, 453, 454, 455, 456, 463 fig. 15.3, 464, 746–747
cumulative paid-in, 4
flow, 15–35, 48
foreign, 215
gain, on exit, 1
gaps, 984
growth, 216
human, 24, 31, 131–132, 134, 142, 143, 144–145 table 4.3, 148, 149, 150, 151, 152, 328, 448, 462, 470, 471, 581, 710, 801, 815
institutional, 15, 18, 31
intellectual, 714
(p. 1002) international markets and, 21, 22, 200, 215
investment, 130, 149
rate of successful exit, 356
market line, 452, 453 fig. 15.1
markets, 54, 85, 149, 193, 222, 641, 642
stock market-based, 767
net rule, 40
overhang for VC funds, 2 fig. I.1
“patient”, 54
protective features for, 250
public market, 17
public subsidy of, 23, 32, 57
raising, 130
reputation, 757
requirements, 199
return of, 131, 136, 251
risk, 15, 16, 63
market, 26
providers of, 17 fig. 1.1
social, 150, 151, 283, 802–804, 806
source of, 8, 15
staged infusions of, 374, 395, 474, 757
stock, R&D, 24,
structure, 8, 30
determinants, 328–353
research on, 378
theory, 329,
total, under management measures, 85
Capital Asset Pricing Model (CAPM), 425, 450, 451, 470, 475.n12
Capital Market Line (CML) and, 452
discounted cash-flow valuation with, 433–436, 440, 443
preference rights and, 444–445
required return determined by, 471–472
capital gains
cash-out potential, 313, 828
taxes, 23, 57, 179, 201.n5, 800, 831, 832
Carpenter, Robert E.
banks granting credit to firms with high default rate, 383
financing needed for high-tech and R&D-intensive industries, 629
information asymmetry and access to financing, 379
lack of collateral in young ventures, 380
Carter, R.
Carter-Manaster 1990 rankings, 64, 72, 78
reputation of investment bankers, 85 n.3
studies of VC participation and firm performance, 762, 765 table 25.2
underwriters and IPO pricing, 61
VCs have reputation capital, 757
Casamatta, Catherine
advice and support of VC in firms, 682.n2
benefits of syndication, 547
contracts mitigate moral hazard, 381
costs of syndication, 549
dual role of VCs, 544
finance decisions study, 376 table 12.1
VC contract theory, 504.n7
VC contracts, 545
VC screening role, 683.n5
Caselli, Stefano
deal-screening process, 633
VC encourages innovation and patents, 633, 635 table 21.1
VC impact on innovation, 672 table 22.1, 675
Cassar, Gavin
effects of lack of financing, 373
financing of SMEs, 378
funding for entrepreneurs, 56
lack of collateral in young ventures, 380
literature on entrepreneurial firms and financial statement information, 689–690 table 23.1
low levels of debt and investment opportunities, 333
size of firm and level of debt, 332
survivorship bias, 378
Castilla, E. J.
local bias in Silicon Valley and on Route 128, 933.n13
VCs and industrial social networks, 401
Chaplinsky, Susan
growth of exits by sales and acquisitions, 251
issuers of resets and stock performance, 263
PIPE investment and contract terms, 247
U. S. PIPE market, 270.n2
VIPE financing, 8
Chemla, Gilles
cost of VCF management, 23
CVC rivalry, 200
exit rights, 545
German VCs, 572
Chemmanur, Thomas J.
benefits of VC financing on portfolio firms, 222, 242.n8
certifying firm value in IPOs, 61
early-stage financing and deal terms, 224, 234
higher growth connected to VC involvement, 633
sequential exit strategies, 648
valuation of IPO shares, 640
Chen, H.
employment details, 813
globalization brings higher monitoring costs, 815, 816
Chesbrough, Henry W.
CVC and internal R&D, 188
CVC studies, 172 table 5.2, 200
goals of CVC, 173, 177
inside-out movement of CVC investments, 225
international CVC investing firms, 175, 197
management of CVC, 161
objective function of CVCs, 546
open innovation, 164, 213
patent development in the Netherlands, 216
(p. 1003) Child, J.
VCF founders, 133
VCF size, 142, 149
Chua, Jess H.
angels’ ownership share 744
early-stage angel investment, 10
expectation gap, 748
Cochrane, John H.
distribution of terminal values, 431
market model in logs, 435
market shifts and VC activity, 363
risk-return characteristics, 439 table 14.6
valuation methodologies, 438
VC exits, 875
VC investment returns, 251, 266
VC returns, 356, 363
VC-backed firms’ equity values and returns, 687,intellectual property and Colombo, Massimo G.
CVC studies, 172 table 5.2
international CVCs, 188
VC helps commercialize innovations, 669
contracts from CVCs, 222, 233
contracts
agency problems and, 798
as safeguards, 239, 312
California market and, 941
cash flow rights and, 488–489 table 16.2
contingencies for, 490–494
common stock, 262 table 7.5, 264 table 7.6, 266, 423, 486–487
control rights and, 489–490 table 16.3, 494–497, 631
in Germany, 579, 580, 596
convertible, 248, 262 table 7.5, 264 table 7.6, 266
debt, 504.n4
from entrepreneurs, 467–473
from venture capitalists, 220, 222, 225, 233, 429, 449, 504 nn. 5, 6, 9, 10, 12, 13, 505.n14, 509–541
and milestone rounds, 486
as commitment device, 529
in the United States, 478–508, 480–481 table 16.1
and financial contracting theory, 482–485
design of, 497–501
shifting risk-bearing to entrepreneurs, 513
future research into, 501–503
governance mechanisms in, 509, 510, 511, 516
hidden-risk, 534–537
in common law countries, 22
in Germany, 573, 575, 581, 583
in public corporations, 516
legislation and, 864
PIPE, 250, 253, 260–265, 262 table 7.5, 271.n10
research & development, 189, 655
reset, 428, 262 table 7.5, 264 table 7.6, 263
security design and, 309, 311
syndicate, 554–557, 555–556 table 18.2
heterogeneity and, 562–567, 565–566 table 18.6
tailor-made, 381
VIPE, 262 table 7.5
corporate entrepreneurship
definition of, 158
internal corporate venturing, 158, 220, 454
corporate governance, 545–547, 550–552
as a consideration for investment decision, 25
emerging markets and, 971
hands-off approach to, 510
post-IPO involvement, 64, 66, 84
syndicate structure and, 543, 545–547, 550–552, 567
impact of heterogeneity on, 560
VC funding and, 543, 544–545
corporate renewal, 158
corporate venture capital, 7, 156–210, 169 fig. 5.1, 211–245, 648–658, 650 fig. 21.5
compared to
independent VCs, 546, 630
strategic alliances, 160–161 table 5.1
definition of, 157–161
ease of financing and, 134
facilitating acquisitions, 173, 190, 651
financing innovation, 628 fig. 21.1
fund, CVC, terminology, 159 fig. 5.1A
fund, CVC in context, terminology, 159 fig. 5.1B
governance of, 178–183
government initiatives, 215–218
historical background, 161–164, 234–241
interactions with other entities, 191–192
interactions with other firm activities, 188–191
investment
and publications per year, 170 fig. 5.6
annual independent VC and CVC investments 1969–2003 166 fig. 5.2A
annual independent VC and CVC investments 1995–2009, 166 fig. 5.2B
patterns of, 165–169
program investment duration, 167 fig. 5.3
relationships, 183–188
revival of, 218–234
announcement characteristics, 232–233 table 6.3
stock returns, 230–231 table 6.2
summary data, 226–229 table 6.1
total activity by ventures’ nation, 1991–2001 169fig. 5.5A
total activity by ventures’ nation, 2001–2009, 169fig. 5.5B
total activity by ventures’ sector, 1991–2001, 168fig. 5.4A
total activity by ventures’ sector, 2001–2009 168fig. 5.4B
literature review, 652 table 21.3
major structures, 179 fig. 5.7
performance implications, 193–198
strategic objectives of, 173
(p. 1004) studies of, by topic, 172 table 5.2
syndication and, 545–547, 560
composition of types in, 561 table 18.4
Cosh, Andy
financing needed for high-tech and R&D-intensive industries, 629
financing of SMEs, 378
future research requested on finance decisions, 374
need for government assistance programs, 971
sources of small business financing, 682.n1
Coval, J. D.
home country bias, 898, 899, 900, 902, 909, 934.n15
local bias and mutual fund industry, 932, 933.n9
local bias and radius of Earth in kilometers, 933.n6
covenants
and key employee matters, 496
debt, 380
from reputable VCs, 65
in Germany, 573, 576–578 table 19.1, 579, 580,
in PIPEs, 250
negative, 494, 496, 498
noncompete, in California, 212, 800–802,
to govern entrepreneur behavior, 240
relating to management of fund, 240
VC, 584, 585
Cumming, Douglas J.
advice and support of VC in firms, 682.n2
Australian government program to foster VC, 792
Australian Innovation Investment Fund initiative, 828
bankruptcy laws and VC activity, 852, 858
Canadian government program to foster VC, 792
capital gain taxes, 832
capital structure of VC-backed firms, 330
change of VCs in financing rounds, 486
contracts mitigate moral hazard, 381
contractual features, 186
contractual terms to deal with agency problems, 722
control rights and exit decisions, 682
convertible preferred shares, 9, 12.n3
costs of monitoring foreign portfolio firms, 357
crowding-out effect, 827
CVC and lower returns than traditional VCs, 222
differences in VC from U. S. to Europe, 630
economic benefits of VC, 824
effects of syndication, 542
effects of U. S. legal and institutional factors on VC contracts, 479
excessive capital and lower returns, 901
exit channels for VCs, 41
exiting at IPO, 3
exits in Asia-Pacific countries, 858
exits via IPO, 57
exits via private sales, 66
finance decisions study, 376–377 table 12.1
financial contracting, 571
fund’s realized return, 4
geographic proximity 11
government attention to SMEs, 972
government capital assistance programs, 971
importance of a country’s legal system to VC exit, 642
in Canada, 827
infrastructure encouragement of VC activity, 800
institutional investors and private equity funds, 18
bankruptcy law and VC activity, 22
international syndication, 542, 544
investment style of VC, 533
IPO revival, 54
legal infrascructure of emerging markets, 971
legal system variables, 866
legal systems and VC deals, 852
“lemons” and “nuts” problem, 312
literature on going public, 644 table 21.1
local bias and experience of VC, 941
local bias in Canada, 933.n8
local bias in international setting, 932
moral hazard issues, 512
nonsyndicated proposals compared to syndicated deals, 322.n2
number of financing rounds, 901
overcoming asymmetric information, 374
performance-related functions of VC syndication, 403 table 13.1
post-investment activities studies, 727 table 24.1
post-investment relationship, 185
preference rights study, 434 table 14.1
preference rights, international differences in use of, 425
public funds and VC firms, 56
public programs and VC activity, 23
publicly sponsored private equity initiaves, 971
risk-return characteristics, 439 table 14.6
secondary purchases, 641
selection criteria and mitigating agency problems, 31
simple security, 310
stimulating economic growth, 211
studies of VC participation and firm performance, 764 table 25.2
syndication and portfolio diversification, 901
syndication improves access to investment deals, 402
tax incentives and VC funds, 241
tax incentives for convertible securities, 545
taxes and VC activity, 802
type of securities used for investment, 374
valuation of nonexited transactions, 28
VC and regional economy studies, 805 table 26.2
VC choice signals quality of the venture, 603
VC contracts, 263
VC exits, 868, 889
VC firm type and financing, 572
VC fundraising, 2
VC impact on economy and business growth, 354
VC in Canada, 545, 547
(p. 1005) VC investment and market conditions, 321
VC investment and uncertainty, 355
VC investment literature summary, 943 table 31.1
VC investments increasing globalization, 810
VC post-investment involvement, 737
VC relationships, 509
VC supply and demand, 833
VC value-added to portfolio firms, 10
VCs syndicate more when portfolios are smaller, 305
VCs use convertible securities, 757
voting rights of CVC funds, 223
Cunningham, Li
access to capital in emerging markets, 971
economic development in emerging markets, 971
government attention to SMEs, 972
Da Rin, Marco
commercialization of new technologies in U. S. and in Europe, 791
European VC markets, 642
infrastructure encouragement of VC activity, 800
propensity score methodology, 683.n4
spurring local VC activity, 23
tax policies, 57
taxation schedules and entrepreneurship, 832
taxes and VC activity, 802
VC and government programs for VC activity, 826
VC and regional economy studies, 805 table 26.2
VC benefits to portfolio firms, 838
VC fund performance in EU and U. S., 864, 877
VC impact on innovation, 673 table 22.1
Dai, Na
board representation and VC investment in public equities, 252
change of VCs in financing rounds, 486
costs of monitoring foreign portfolio firms, 357
geographic proximity and VC activity, 11
local bias and experience of VC, 941
U. S. PIPE market, 270.n2
VC choice signals quality of the venture, 603
VC firms investing in PIPEs, 247, 250, 254
VC investment literature summary, 943 table 31.1
VC investments increasing globalization, 810
VC IRR, 4
Dantas Machado, Catarina
subpar returns of European early-stage ventures, 865
VC fund performance in EU and U. S., 864, 877
de Bettignies, Jean E.
intellectual property and contracts from CVCs, 200, 222, 23
debt financing
and agency problems, 798
and asymmetric information, 348
and intellectual property rights, 659
availability of, 21, 546
in Germany, 573, 575, 579, 585
need for, 596
De Clercq, Dirk
post-investment activities studies, 727 table 24.1
Spanish VC-backed firms, limiting sample to, 334
VC adds value to new ventures, 724
VCs learn from past investments, 739
Dees, J. G.
application of business practices to nonprofit organizations, 277
economic value complements social value, 277
SEs promoting social value over financial gains, 277
Dessi, Roberta
advice and support of VC in firms, 682.n2
control rights and exit decisions, 682
monitoring and intervention of VC in firms, 682.n2
VC and innovation, 10
VC impact on innovation, 669, 676, 681
Dewatripont, Mathias
cash flow and control rights in VC contracts, 497
control rights in PIPE investment, 261
VC contract theory, 504.n7
Dimov, Dimo P.
human capital of VCF founders, 132
post-investment activities studies, 727 table 24.1
VC adds value to new ventures, 724
VC development patterns, 846
dividend preference. See preference rights
Dushnitsky, Gary
annual annuity investment and cash flow, 175
characteristics of a parent firm’s industry,175, 176
compensation schemes of CVCs, 223
corporate investors and noninvesting firms, 174
corporate venture capital, 650, 651
CVC and creation of firm value, 198
CVC compensation schemes, 196
CVC firms in U. S., 202.n13
CVC governance, 178
CVC literature, 157, 170, 171
CVC performance, 193
CVC studies, 172 table 5.2
CVC terminology, 158
CVC-alliance association, 189
data sources, 201.n6
differences in corporate fund structure, 7
entrepreneurs’ choice of independent VCs over CVCs, 192
experiences of corporate-entrepreneur in finance and product markets, 201
inclination to engage in CVC, 199
investment patterns, 165, 167, 177, 182
literature review of, 652 table 21.3
M&A action, 203.n32
patenting rates and CVC investment, 197
poor results of government CVC divisions, 219
relationship between CVC and entrepreneurs, 184
CVC and internal R&D, 188
disclosure requirements and quality deal flow, 185
similarity of CVC and alliances, 160, 161
(p. 1006) two-sided matching of VC and entrepreneur, 898
typical CVC parent is technology-driven, 221,
Dzienkowski, John S.
lawyers as VCs, 605, 606, 610, 621.n1
Eisenhardt, K. M.
information asymmetry and access to financing, 379
organizational boundary, 822
research on semiconductor firms, 151
Emerson, J.
investors in the investment plane, 278
SEs and the double-bottom line, 277
SEs as both nonprofit and for-profit, 276
Engel, Dirk
benefits to firms from VC funding, 794
German VC involvement, 633
twenty-minute rule for location of VC and portfolio firm, 897
two-sided matching of VC and entrepreneur, 898, 900
VC encourages innovation and patents, 636 table 21.1
VC impact on innovation, 672 table 22.1, 675
Erlich, Sanford B.
angels compared to VCs, 722
angels’ post-investment involvement, 725
entrepreneurs who seek angel investment, 741
post-investment activities studies, 727 table 24.1
social process important to post-investment involvement, 748
execution risk, 573, 581
experience
as a function of VC networks, 410 table 13.2
as a variable, 137–139 table 4.2, 361–362 table 11.1, 903–904 table 30.1
firms, 133
in Germany, 571, 572, 573, 574, 575, 585
as a variable, 581–584
human capital and, 132, 140, 149, 152.n3, 203nn.32, 33, 252, 275, 309, 314, 15, 407, 815
in VC contracting, 233
influencing investment strategy, 149, 150, 190, 248, 249, 415, 433, 443, 459, 499
local market, 28
managerial, 30, 31, 140, 145, 221, 237
measured by
high market shares, 62
top league-table rankings, 62
of angels, 725, 731, 735 table 24.3, 736, 739
of entrepreneurs, 730, 731
of high-tech startups, 661, 721
of investors, 414
of law firms, 61, 500, 620
of syndications, 363, 402, 414–416, 417, 418, 548, 550, 552, 611
as a measure of heterogeneity, 557
of VC, 409–410, 413, 596, 598, 604, 629, 642, 653, 659, 724, 813, 819, 820, 895, 900, 912, 914, 926
Korean, 767
reputation and, 63, 66, 68–69 table 3.1, 70
technical, 180
VIPE issuers and, 266
external equity
and capital structure of VC-backed firms, 348, 378, 379, 382, 385, 391, 392, 394
converted into intangible capital, 700, 703, 713
external risk, 573, 581
Fama, E.
debt trade-off theory vs. pecking order theory, 330
growth opportunities of firms, 337
natural logarithm of total assets, 336
profitability, 337
relationship between volatility and debt, 333
size of firm and probability of default, 332
tax effects, 337
Fama, Eugene
calendar time returns, 252
companies going public at an early age, 250
forty-eight industry classifications, 271
Fiet, James O.
angels and agency risks, 725
angels compared to VCs, 722
angels’ choice of investment target, 734
deal evaluation by lead VC, 306
financial debt
access to, 378, 397
as a variable, 385, 386 table 12.2
bank practices and, 383
bankruptcy and, 384
base of assets and, 392, 395, 396
cash flow and, 394
equity and, 380
firm characteristics and, 393 table 12.5
operational debt and, 374, 378, 379, 391
place in pecking order, 382, 389
financing decisions
expedited due diligence process and, 853
pecking order and, 348
variables affecting, 347
Flannery, M.
debt trade-off theory, 330
natural logarithm of total assets, 336
profitability, 337
tangible assets, 336
tax effects, 337
Fletcher, Margaret
access to finance for SMEs, 966
banks as source of finance for SMEs, 967
gap in connecting with investors, 968
Florida, R.
alternatives to existing firms, 797
social capital, 803
(p. 1007) VC adds skills to ventures, 798
VC and regional economy studies, 805 table 26.2
Florida, Richard L.
impact of VC funding, 38
value-added of VC investment, 56
VCs and industrial social networks, 401
Folta, Timothy
CVC and other firm activities, 188
strategic alliances, 653
Frank, M.
debt trade-off theory vs. pecking order theory, 330
median asset growth in high-tech firms, 347
natural logarithm of sales, 336
profitability, 337
size of firm and level of debt, 332
size of firm and probability of default, 332
tangible assets of firms, 331, 336
Franke, N.
importance of entrepreneur and VC assessment, 322.n11
local bias, 900
two-sided matching of VC and entrepreneur, 898
VCs and similarity bias, 314
French, K. R.
calendar time returns, 252
companies going public at an early age, 250
debt trade-off theory vs. pecking order theory, 330
factors to measure long-run abnormal stock returns, 75
forty-eight industry classifications, 271
forty-eight industry classifications, 271
growth opportunities of firms, 337
home country bias, 898
natural logarithm of total assets, 336
profitability, 337
relationship between volatility and debt, 333
size of firm and probability of default, 332
tax effects, 337
Fried, Jesse
commitment devices, 521
contractual cash flow contingencies, 487
data gathering on VC contracts, 484
incentive mechnisms, 516
renegotiations in VC contracts, 503
VC contracts study, 480 table 16.1
Fried, Vance H.
agency risk handled better by VCs than by angels, 322.n5
due diligence process, 317, 319
evaluation of entrepreneur by VC, 319
even failed entrepreneurial experience can benefit chances of funding, 315
importance of entrepreneur and VC assessment, 323.n11
international VC allocation process, 18
some proposals rejected because of lack of time to investigate, 308
VC agency costs, 66
VC fund selection, 26, 30
VC fundraising, 130
VC human capital, 132
VC investment strategy, 133
Fujita, Masahisa
agglomeration and entrepreneurial clusters, 902
geographical economics, 939, 940
fundraising, 130–155
capital overhang, in U. S., 3 fig. I.1
criteria for selection of VC funds, 26–29, 27 fig. 1.3
cycles of, 533–534
firm strategy, 133–134
demographics of VCFs, 135 table 4.1
descriptive statistics, 137–139 table 4.2
variables, 146–147 table 4.4
in Europe, by investor type, 19–20 table 1.1
in Poland, 974, 975 fig. 32.1
phases of, 281 fig. 8.2 See also human capital
Gaba, Vibha
characteristics of CVC parent firm, 175
CVC adoption patterns, 176
CVC studies, 172 table 5.2
Gans, Joshua S.
corporate venture capital, 653, 654
experiences of a corporate-entrepreneur pair, 201
SBIR results in U. S., 796
VC helps commercialize innovations, 669
Garman, Ronald J.
advantages of stock market-based financial system on IPO exit, 767
California and non-compete clauses, 212
characteristics of VCFs, 141
Cisco and networking, 242.n2
convertible preferred securities and tax bias in U. S., 11 n.3
economic benefits of VC, 824
financial market infrastructure, 22
German government program to foster VC, 791–792
government intervention in VC, 827
government programs to foster VC, 797, 827
inside-out movement of CVC investments, 225
international VC, 21
Israeli government program to foster VC, 792
labor market restrictions and VC activity, 23
lawyers as VCs, 609
legal environment for VC activity, 800
“open innovation” emphasis, 213
patent development in the Netherlands, 216
preferred shares and U. S. tax laws, 423
social capital, 804
tax issues, 621
U. S. and strong IPO market, 833
U. S. stock market supporting VC market, 642
VC and business incubation, 603
VC exits, 21, 41
VC fund performance in EU and U. S., 864, 877
VCs as drivers of innovation, 767
(p. 1008) Germany
capital market in, 571–601
financing instruments and covenants used in, 576–578 table 19.1, 580 fig. 19.1, 584–598
VC contracting
direct measures of incentive problems, 581–584, 582 table 19.2, 583 table 19.3
regression analyses for, 594–595 table 19.5
experience in, 581–584
ownership structure of, 581–584
regression analyses for financing arrangements, 586–593 table 19.4
United States and, 575–580
Goldfarb, Brent D.
angel involvement weakens control, 500
continuing life in “failed” firms, 318–319
data gathering on VC contracts, 484
VC contracts study, 481 table 16.1
Gompers, Paul A.
agency problems affect monitoring and staging, 354, 357, 358, 362
agency risks, 514
benefits of VC financing on portfolio firms, 222
benefits of VC to economy, 791
boom periods of investment, 534
cash flow and control rights in VC contracts, 497, 499
categorizing firms, 868
characteristics of VCF founders, 134, 141, 150
compensation schemes, 515
corporate venture capital, 649, 650, 651
CVC program longevity, 195
CVC studies, 172 table 5.2
CVC valuation and their fit with parent corporation, 194, 203nn.27, 34
CVCs’ differences from VCs, 546
data gathering on VC contracts, 484
data sources, 42, 85.n9, 134, 170, 201.n6
down periods of investment, 533
economic benefits of VC, 834
effects of capital gains on VC activity, 23
effects of VC funding in early stages of a firm, 38, 56
effects of financial crisis, 41
entrepreneurs’ involvement after investment, 356
excessive capital and overvaluations, 901
experience of VC firms, 895
failure of CVC efforts in 1990s, 218
finance decisions study, 375 table 12.1, 397.n2
financial contracts and frictions, 482
firm strategy and VCF fundraising success, 145
fund history affects future fundraising, 26, 28
geographic proximity of VC firm and portfolio firm, 133
goals of VC firms, 130
grandstanding, 767
historic evolution of the asset class, 17
history of VC, 162, 164, 165, 193, 201.n5
importance of entrepreneurial experience in being funded, 315
increased GDP and entrepreneurial possibilities, 881
indicator variables, 86 n.16
influences on U. S. VC fundraising, 21
information advantages of VCs, 767
information asymmetry between VC and new venture, 898
information asymmetry, studies of, 356
investment staging, 374, 381, 391
investments driven by experience and skill, 819
IPO as success, 364
IPO firms and VC firms affiliated with banks, 768
IPOs and security-company-affiliated VCs, 784
IPOs and VC/lawyer involvement, 620
literature on going public, 645 table 21.1, 652 table 21.3
long-term performance of VC-backed and non-VC-backed IPOs, 780, 781
market shifts and VC activity, 363
measure for capital commitments, 363
monitoring by VC adjusts with risk level, 799
overcoming asymmetric information, 374
overlapping venture funds, 136
overview of VC market, 425
pension funds investing in VC, 57
performance-related functions of VC syndication, 403 table 13.1
proposal evaluation and market conditions, 320
R&D expenditures and VC activity, 24
reasons some VCs remain small and focused, 85
VC performance, 86nn.11, 12
risks of new ventures, 512
sharing and management of experience, 407
spin-outs, 159
staged financing, 514
staging and information asymmetries, 901
staging frequency, 8
strategic alliances, 655
strategic fit between target and parent firms, 220, 225
studies of VC participation and firm performance, 759, 761, 764 table 25.2
taxation schedules and entrepreneruship, 832
taxes and VC activity, 802
type of exit, 875, 879
U. S. and strong IPO market, 833
uncertainty in VC market, 369
unfamiliarity with entrepreneur affecting agency problems, 357
use of Weibull model for duration studies, 360
VC and adding value, 83, 84
VC and interest rate level, 834
VC and rate of return on investments, 831
VC contracts, 504.n6, 504.n13, 505.n14
VC fees, 4
VC fundraising, 889
VC impact on innovation, 682
VC investment and stimulating growth, 794
VC investments increasing globalization, 810
(p. 1009) VC reputation, 62, 64, 66, 67, 68 table 3.1,70, 76, 77, 78, 79
VC specialization and firm success, 821
VC staging and screening of entrepreneurs, 486
VC supply and demand, 824, 833, 838, 859
VC-backed firms’ equity values and returns, 687
VCs add value to entrepreneurial firms, 642
VCs as limited partners, 545
VCs stage capital infusions to minimize risk, 757
VCs syndicate investments, 757
VCs use convertible securities, 757
VEIC class and SIC codes, 363
Gorman, Michael
goals of VC firms, 130
managerial support of VCs, 369.n1
post-investment activities studies, 727 table 24.1
VC contracts and monitoring of targets, 483
VC time spent with portfolio firms, 723
Goyal, V.
debt trade-off theory vs. pecking order theory, 330
median asset growth in high-tech firms, 347
natural logarithm of sales, 336
profitability, 337
size of firm and level of debt, 332
size of firm and probability of default, 332
tangible assets of firms, 331, 336
Granovetter, Mark
human assets and VC globalization, 813, 816
importance of trust in economic relations, 405, 406
performance-related functions of VC syndication, 404 table 13.1
social capital, 803
Groh, Alexander
institutional investors and fee structures of VCs, 27
measures of attractiveness of countries for VC allocation, 26
sources of VC funds around the world, 7
VC allocation decisions, 24, 27, 29
Guijarro, Antonia
access to finance for SMEs, 966
government assistance to different business activities, 968
government assistance to specific sectors, 968
Guo, Re-Jin
biotech industry growth, 879
R&D intensity related to returns to investors in Korean high-tech IPOs, 754
strategic alliances, 653
Gupta, Anil K.
geographic location and investment strategies, 133
postinvestment activities studies, 728 table 24.1
VC postinvestment involvement (PII), 723
Haeussler, Carolin
deal-screening process, 633
VC encourages innovation and patents, 633
VC encourages innovation and patents, 636 table 21.1
VC impact on innovation, 673 table 22.1, 675, 678
Hall, Bronwyn H.
financing needed for high-tech and R&D-intensive industries, 629
importance of support to R&D activities, 627
learning benefits and CVC, 204.n38
patenting, 202.n13
patents, 661.n1
securitization of intellectual property rights, 659
Hall, J.
decision making at investment phases, 30
due diligence process, 317
evaluation of business plans and their financial projections, 319
Hamao, Y.
dummy variable for security company having ownership in IPO firm, 771
information advantages of VCs, 767
IPOs and security-company-affiliated VCs, 784
long-term performance of VC-backed and non-VC-backed IPOs, 780, 781
measure of VC backing, 771
studies of VC participation and firm performance, 760 table 25.2
Handre, John
employee stock options in venture-backed firms, 694
literature on entrepreneurial firms and financial statement information, 692–693 table 23.1
VC-backed firms’ equity values and returns, 687
Hansmann, H.
nonprofits and protecting social value of the enterprise, 277
nonprofits and the nondistribution constraint, 276, 278, 283, 284
Haritchabalet, Carole
benefits of syndication, 547
costs of syndication, 549
second opinions and potential competition, 306
VC screening role, 683.n5
Harris, Christopher
exponential discount functions, 518
time-consistent issues, 510
welfare losses, 522
Harris, Milton
capital structure of firms, 329, 331, 350.n1
debt trade-off theory, 330
relationship between volatility and debt, 333
VC contract theory, 504.n7
Harrison, Richard
access to finance for SMEs, 966
angels compared to VCs, 722
angels invest in early stages of venture, 725, 741
assistance for making firms investment-ready, 968
challenges and problems in financial marketplace, 968
firms not investment ready, 968
funding sources for entrepreneurs, 56
(p. 1010) government programs for SMEs in developed countries, 971
post-investment activities studies, 727 table 24.1
public authorities and assistance for SMEs, 968
role of referrals in screening of proposals, 315
Hart, Oliver D.
costs of syndication, 549
difficulty in creating contracts that cover all contingencies, 798
strategic alliances, 655
tangible assets, 513
testing of financial contract theory, 482
VC contract theory, 504.n7
VC contracts designed for each situation, 482
VC contracts in Germany and the U. S., 581
Haushalter, David
issuers of resets and stock performance, 263
PIPE investment and contract terms, 247
U. S. PIPE market, 270.n2
VIPE financing, 8
Hege, Ulrich
capital structure of VC-backed firms, 330
syndication and information asymmetry, 901
VC and local bias when investing alone, 926
VC fund performance in EU and U. S., 864, 877
VC performance in Europe and U. S., 858
Hellman, Thomas M.
advice and support of VC in firms, 682.n2
bank investment builds lending relationships, 768
bank venture capital, 177
benefit of certification from reputable banks, 62
captive VCs, 545
control rights and exit decisions, 682
control rights for VCs, 630
corporate venture capital, 651
creation of national venture capital market in Germany, 217
CVCs’ differences from VCs, 546
economic benefits of VC, 824
exit strategies, 545
experiences of corporate-entrepreneur in finance and product markets, 201
innovators and product marketing, 633
investor characteristics in VC contracts, 499
management replacement, 631
prudent man standard, 85 n.9
studies of VC participation and firm performance, 758, 765 table 25.2
value-added benefits of syndication, 322.n1
VC affiliation with banks, 85
VC board seats, 495
VC control of board, 514
VC encourages innovation and patents, 635 table 21.1
VC firm type and financing, 572
VC impact on innovation, 672 table 22.1, 674
VC monitoring, 531
VCs add value to portfolio firms, 757
VCs help place key personnel, 669
VCs in high-tech industry as coaches, 401
Hertzel, Michael G.
financing after IPO, 643
illiquidity premiums, 474.n5
literature on going public, 645 table 21.1
purchase discount from purchase if PIPE, 261
U. S. PIPE market, 270.n2
Higgins, Matthew
corporate venture capital, 649
M&A agency considerations, 657
M&A in innovative firms, 656
strategic alliances, 654
Hill, Susan
benefits of syndication, 191, 195
CVC program longevity, 204.n37
CVC studies, 172 table 5.2
governance structures, 182, 185, 187
Hirsch, Julia
financial contracting, 599
German VCs, 572
independent law VC firms more sophisticated than dependent, 585
staged financing, 545
VC contract design, 546
Hirukawa, Masayuki
innovation-first hypothesis, 632
VC encourages innovation and patents, 635 table 21.1
VC impact on innovation, 671 table 22.1, 674
Hisrich, Robert D.
criteria for selection of VC funds, 26, 30
due diligence process, 317, 319
evaluation of entrepreneur by VC, 319
even failed entrepreneurial experience can benefit chances of funding, 315
international VC allocation process, 18
some proposals rejected because of lack of time to investigate, 308
VC fundraising, 130
VC human capital, 132
VC investment strategy, 133
Hochberg, Yael V.
benefits of particular choice of VC firm, 621.n1
benefits of syndication, 547
CVC and VC survival, 1980–2003, 194
CVC studies, 172 table 5.2
data sources, 42
firm centrality and number of portfolio firms that reach IPO, 151
network effects of VCs, 605
performance-related functions of VC syndication, 403 table 13.1
sociological theories of, 405
syndicate structure and deal performance, 568
syndication as barrier to entry for VCs, 307
VC networks, 192
VC reputation, 65, 67, 68 table 3.1, 82, 86 n.18
VC syndication regionally based, 304
VCs invest with others they know, 542
(p. 1011) Holmstrom, Bengt R.
costs of syndication, 549
governance mechanisms, 509, 515
monitoring and intervention of VC in firms, 682.n2
VC contract theory, 504.n7
VC impact on innovation, 681
VC reputation, 85 n.1
Hovakimian, Armen
debt trade-off theory, 330
incremental finance decisions in VC-backed firms, 385
interest rate payments and tax deductions, 332
natural logarithm of sales, 336
natural logarithm of total assets, 336
profitability, 337,
size of firm and level of debt, 332
tangible assets of firms, 331, 336
Hsu, David H.
interaction between VC-backed firms, venture funds, and entrepreneurs, 687
literature on going public, 645 table 21.1
reputation of VC and information asymmetry, 900
signals quality of the venture, 603, 604
two-sided matching of VC and entrepreneur, 898
VC choice, cost of, 621
VC credentials, 483
VC helps commercialize innovations, 669
VC reputation, 64, 70, 81
VCs and information, 621.n10
Hughes, Alan
access to finance for SMEs, 966
challenges and problems in financial marketplace, 968
financing options for SMEs, 968
firms not investment ready, 968
firms not warranting financing, 968
need for government assistance programs, 9
as an intangible asset, 699, 700
during hot markets, 321
importance of, 31, 815
in Poland, 983
new ventures and, 801
of entrepreneur, 512, 581
specialized, 687
summary findings, 147 table 4.5
variables 144–145, table 4.3
Huyghebaert, Nancy
banks and liquidating firms, 384
cost of operational debt, 397.n1
interest rate on trade credit, 382
information asymmetry. See asymmetric information
initial public offering (IPO)
and VC control over portfolio firms, 514
as a measure of VC success, 130, 364
as exit for venture capital investment, 1, 211, 637, 641–642, 800
compensation schemes and, 515, 630
technology companies and, 643
innovation
access to, 627–667, 628 fig. 21.1
clean-tech, 941
clustering of firms and, 212
competition and, 304, 511
core business and, 234
corporate venture capital and, 158, 163, 164, 170, 171, 174, 176, 177, 199, 200, 201, 218, 220, 221, 238
and internal R&D, 188
and telecommunications equipment manufacturing industry, 197
contracts of, 479, 509
effects of financial crisis, 37, 38, 58
financing of, 627–667, 628 fig. 21.1
bank, 967
government, 968
in Poland, 980–981 table 32.3, 985 table 32.4, 987 fig. 32.4, 989 fig. 32.5
international, 969–970 table 32.1
government programs encouraging, 25, 215, 216, 218
informational asymmetries and, 510
-intensive start-ups, 512, 513, 514
of entrepreneur
effort and, 482
informational advantage regarding, 515
open, 213
performance procrastination and, 523–525, 527
sale of, 235
social, 276, 277
time-inconsistent misconduct, 523, 529, 530, 531
venture capitalists and, 9–10, 632, 634–636 table 21.1, 668–685, 671–673 table 22.1, 683.n4, 799, 838
intellectual property
access to, 649
as an asset, 512, 611, 632, 979
contractual provisions for, 609, 622.n12, 654, 655, 656
firm location and, 801
in biotechnology, 258
patent value funds and, 658–659
protection, 175, 194, 222, 657
rights, 185, 200, 236, 627, 629
in Poland, 981, 986, 988
securitization of, 659–660
internal equity
and venture capital-backed companies, 389, 390 table 12.4
as a finance option, 391, 393 table 12.5, 394, 395
from retained earnings, 379, 385, 387
internal risk
and VC experience, 574, 584
as an incentive problem, 573, 581, 582 table 19.2
(p. 1012) Iriyama, Akie
transnational technical communities, 817
VC activity as a global movement, 355
VC globalization, 10
VC investments increasing globalization, 810
Ivanov, Vladimir
CVC, literature review of, 651, 652 table 21.3
CVC studies, 172 table 5.2
CVC success, 193
strategic fit of target and parent firms, 225
strategic fit of CVC and venture, 194, 203.n34
value when parent is involved in target firm, 220–221
Jain, B. A.
benefits from VC funding, 794
market-to-book ratio, 86 n.11
studies of VC participation and firm performance, 759, 766 table 25.2
VCs and reputation capital, 757
Jell, Florian
financial crisis, 38
VC turns innovation into products, 56, 57
Jeng, Leslie A.
advice and support of VC in firms, 682.n2
capital gain taxes, 832
characteristics of VC funds, 141
closed-end fund regulation, 828
economic benefits of VC, 824
European VC, 834
government intervention in VC, 827
increased GDP and entrepreneurial possibilities, 881
labor market rigidities, 839
skilled employees, 860.n4
VC fundraising, 130
VC globalization, 200
VC investment and the IPO, 21
VC supply and demand, 833
Jensen, Michael C.
banks as lenders compared to VC, 798
debt and bankruptcy costs, 330
leveraged buyouts, 516
limited liability of shareholders, 331
tangible assets of firms, 331
VC contracts and agency problems, 511
VCs and agency problems, 356, 357
VCs and free cash flow agency costs, 363
Johan, Sofia A.
Canadian VCs, 547
contractual differences between independent and corporate venture capitalists, 186
contractual terms to deal with agency problems, 722
CVC studies, 172 table 5.2
effects of U. S. legal and institutional factors on VC contracts, 479
financial contracting, 571
government capital assistance programs, 971
local bias in Canada, 933.n8
local bias in international setting, 932
moral hazard issues, 512
number of financing rounds, 901
postinvestment activities studies, 727 table 24.1
preference rights, international differences in use of, 425
use of convertible preferred shares, 9, 12.n3
regulatory features, 22
valuations of unexited portfolio companies, 4
VC postinvestment involvement, 737
VC relationships, 509
voting rights of CVC funds, 223
Kann, Antje
CVC structure, 80, 202.n10
CVC studies, 172 table 5.2
goals of CVC, 174, 178, 1
Kannianen, V.
syndication and portfolio diversification, 901
twenty-minute rule for location of VC and portfolio firm, 897
VC investment and market conditions, 321
Kaplan, Steven N.
advice and support of VC in firms, 682.n2
cash flow contingencies and control rights in VC contracts, 484, 497, 504.n12
control of external uncertainty, 356, 359
corporate venture capital, 649
data gathering on VC contracts, 484
examination of actual investment memoranda to determine motives for deal decisions, 314
finance decisions study, 375 table 12.1
financial contracting, 571, 572, 599
follow-on funds, 26, 28
follow-up contracts, 575
incentive problems in VC firms, 573, 581
interaction between VC-backed firms, venture funds, and entrepreneurs, 687
investment staging, 374, 383
investor characteristics in VC contracts, 499
issuer characteristics in VC contracts, 498
legal systems and VC deals, 853
M&A in innovative firms, 656, 657
non-U. S. VCs imitating U.S. VC contracts, 479
preference rights study, 434 table 14.1
R&D in smaller firms more efficient, 627
rating of VC by past fund returns, 64, 65, 67, 68 table 3.1
relationship of VC and portfolio firm, 572
relative shares of venture-backed IPOs in U. S. and Europe, 638
return persistence, 252
securities used in VC investments, 504.n10
security design affects level of due diligence, 311
tailor-made contracts, 381
tracking of initial evaluation related to performance outcomes, 314
type of securities used for investment, 374
(p. 1013) U.S. VCs compared to German VCs, 573, 575, 582, 592,
unfamiliarity with entrepreneur affecting agency problems, 357
uniformity of risk exposure, 306
VC activity and stock market waves, 21
VC board seats, 495
VC compensation, 483
VC contracts, 250, 263, 482, 544
VC contracts structure, 497
VC contracts study, 481 table 16.1, 505.n14
VC fundraising, 6
VC screening role, 683.n5
VC uncertainty caused by internal and external factors, 356
VCs and agency problems, 357
Keil, Thomas
corporate dependencies, 188
CVC governance, 178, 180, 182, 185, 187
CVC interaction with other entities, 191, 192
CVC investment, 189
CVC learns from VC, 181, 182
CVC research, 200
CVC studies, 172 table 5.2
M&A action, 203.n32
Keilbach, Max
agglomeration and entrepreneurial clusters, 902
benefits to firms from VC funding, 794
development of clusters of VCs and entrepreneurs, 932
entrepreneurship and VC development, 838
German VC involvement, 633
twenty-minute rule for location of VC and portfolio firm, 897
two-sided matching of VC and entrepreneur, 898, 900
VC encourages innovation and patents, 636 table 21.1
VC impact on innovation, 672 table 22.1, 675
Kenney, M.
alternatives to existing firms, 797
VC adds skills to ventures, 798
VC and regional economy studies, 805 table 26.2
Kenney, Martin
benefits of VC activity, 38
VC activity as a global movement, 355
VC firms as technological gatekeepers, 56
VCs and industrial social networks, 401
Keuschnigg, Christian
benefits of VC activity, 38
capital gain taxes, 832
contractual terms to deal with agency problems, 722
government support and VC risk, 827
improved financial intermediation and economic growth, 794
local bias and regional development policies, 932
syndication and portfolio diversification, 901
twenty-minute rule for location of VC and portfolio firm, 897
VC and regional economy studies, 805 table 26.2
VC investment and market conditions, 321
VC market and tax laws, 57
Kini, O.
benefits to firms from VC funding, 794
market-to-book ratio, 86 n.11
studies of VC participation and firm performance, 759, 766 table 25.2
VCs and reputation capital, 757
Klepper, S.
CVC activity and innovation, 201
legal environment for VC activity, 800, 801
spin-outs, 159
Klonowski, Darek
access to capital in emerging markets, 971
asymmetric information and moral hazards in emerging markets, 971
financial disclosure in emerging markets, 971
governance concerns in emerging markets, 971
legal infrastructure of emerging markets, 971
property rights and investment, 11
Kortum, Samuel S.
benefits of VC activity, 38, 56
economic benefits of VC, 824
patent applications, 882
studies of VC participation and firm performance, 765 table 25.2
VC affect on innovation, 834
VC and R&D, 797
VC encourages innovation and patents, 632, 633, 634 table 21.1
VC impact on economy and business growth, 354
VC impact on innovation, 670, 671 table 22.1, 674
VC investment and market conditions, 321
VCs add value to portfolio firms, 757
Kotha, S. B.
CVC studies, 172 table 5.2
CVC-innovation relationship, 197
data study, 170
Krishnan, C. N. V.
instrumental variables, 82
predicting subsequent IPOs, 73
reputation measures, 83, 84, 85
reputation post IPO, 74
robustness analysis, 70
VC IPO Market Share, 89
VC reputation, 7, 61, 62, 63, 65, 66, 68 table 3.1, 69 table 3.1
Kurth, Andreas
German VC-backed IPOs, 642, 643
hot and cold markets, 642
literature on going public, 644 table 21.1
Kwok, Jennifer
access to finance for SMEs, 966
assistance for making firms investment-ready, 968
challenges and problems in financial marketplace, 968
firms not investment ready, 968
(p. 1014) La Porta, Rafael
law and finance, 22, 849
legal systems and financial contracting, 571, 573
legal system variables, 866, 890
politics create uncertainty, 840
rule of law, 825
Laibson, David
commitment devices, 521
exponential discount functions, 518
time-consistent issues, 510
welfare losses, 522
Lavie, Dovev
CVC and internal R&D, 188
CVC studies, 172 table 5.2
CVCs and alliances, 160, 189, 192
late-stage investments, 1, 133, 367
and VIPEs, 255
during hot markets, 321
evaluation activities for, 319, 320 table 9.3, 321
government-sponsored programs and, 827
investor objectives and, 171
related to experience of VC managers, 149
related to returns, 232–233 table 6.3
panel D, 234, 813
risk of imitation and, 307
Lee, Peggy M.
grandstanding, 767
no difference between VC- and non-VC-backed firm performance, 724
studies of VC participation and firm performance, 758 table 25.2
VC reputation, 67, 68 table 3.1, 70, 81
Lenox, Michael J.
annual anuity investment and cash flow, 175
characteristics of a parent firm’s industry, 176, 177
CVC and internal R&D, 188
corporate investors and noninvesting firms, 174
corporate venture capital, 650, 651
CVC firms in U. S., 202.n13
CVC patterns, 198, 199
CVC performance, 193, 194, 195
CVC remain in their own sector, 167
CVC strategic fit, 203.n34
CVC studies, 172 table 5.2
CVC studies, 172 table 5.2
data sources, 170
literature review of, 652 table 21.3
patenting rates and CVC investment, 197
two-sided matching of VC and entrepreneur, 898
typical CVC parent is technology-driven, 221.
VC impact on economy and business growth, 354
Lerner, Josh
advice and support of VC in firms, 682.n2
Australian Innovation Investment Fund initiative, 828
benefits of VC financing on portfolio firms, 222, f
benefits of VC to economy, 791
categorizing firms, 868
compensation schemes, 515
concerns about exit possibilities, 865
corporate venture capital, 649, 650, 651
CVCs’ differences from VCs, 546
distance between VC and portfolio firm affects contract terms, 500
down periods of investment, 532
economic benefits of VC, 824, 834
effect of taxes on business, 23
effects of U. S. legal and institutional factors on VC contracts, 479
establishing deal flow, 304
excessive capital and overvaluations, 901
failure of CVC efforts in 1990s, 218
financial contracting, 571
financial contracts and frictions, 482
financial crisis and VC market, 38, 41, 42
financing needed for high-tech and R&D-intensive industries, 629
government capital assistance programs, 971
history of asset class, 17
history of CVC, 162, 164, 165, 170
history of VC, 201nn. 5, 6
increased GDP and entrepreneurial possibilities, 881
increased R&D and VC activity, 811
literature review of, 652 table 21.3
information advantages of VCs, 767
information asymmetry between VC and new venture, 898
investor characteristics in VC contracts, 499
IPO as success, 364
IPO firms and VC firms affiliated with banks, 768
IPOs and security-company-affiliated VCs, 784
lawyers certifying, 609
life cycle of the syndicate, 307
long-term performance of VC-backed and non-VC-backed IPOs, 780, 781
M&A in innovative firms, 656, 657
monitoring mitigates moral hazard, 381
number of syndicate members increase with each round, 307
overview of VC market, 425
patent applications, 882
performance-related functions of VC syndication, 403–404 table 13.1
physical distance hampers monitoring, 898, 900
politics create uncertainty, 840
preference rights study, 434 table 14.1
preventing abuse of information asymmetrics, 406
proposal evaluation and market conditions, 320
prudent man standard, 85 n.9
publicly sponsored private equity initiatives, 971
R&D expenditure and VC activity, 24
R&D in smaller firms more efficient, 627
relative shares of venture-backed IPOs in U. S. and Europe, 638
risk evaluation skills, 407
risks of new ventures, 512
SBIR program, 827
(p. 1015) SBIR results in U. S., 796
securitization of intellectual property rights, 659
selection of VC funds, 26
sharing and management of experience, 407
stimulating economic growth, 211
strategic alliances, 653, 654
strategic fit between target and parent firms, 220, 225
studies of VC participation and firm performance, 761, 765 table 25.2
syndication and project selection, 363
taxation schedules and entrepreneurship, 832
taxes and VC activity, 802
testing of financial contract theory, 482
twenty-minute rule for location of VC and portfolio firm, 897
type of exit, 879
U. S. and strong IPO market, 833
U. S. government program to foster VC, 792
VC and innovation, 56, 57
VC and interest rate level, 834
VC and R&D, 797
VC and rate of return on investments, 831
VC board seats, 495
VC contracts, 504.n6
VC control of board, 514
VC effect on innovation, 834
VC encourages innovation and patents, 632, 633, 634 table 21.1
VC fees, 4
VC fundraising, 21, 28, 130, 134, 136, 141, 145
VC fundraising, 889
VC impact on economy and business growth, 354
VC impact on innovation, 668, 670, 671 table 22.1, 674, 682
VC investment and market conditions, 321
VC investments increasing globalization, 810
VC reputation, 66, 67, 68 table 3.1, 71, 80
VC supply and demand, 824, 833, 838, 859
VC syndication, 305
regionally based, 304
VC syndication, 603, 604
VC transaction structures, 22
VC-backed firms’ equity values and returns, 687
VCs add value to portfolio firms, 757
VCs and “window dress” opportunities, 402
VCs as limited partners, 545
VCs syndicate, 542
VEIC class and SIC codes, 363
Li, X.
information advantages of VCs, 767
IPO firms and VC firms affiliated with banks, 768
studies of VC participation and firm performance, 766 table 25.2
Li, Yong
control of external uncertainty, 356
costs of monitoring foreign portfolio firms, 357
CVC studies, 172 table 5.2, 188
CVC target selection, 190
market shifts and VC activity, 363
staged financing, 358
VC investment as a real option, 354
VC staging, 8
limited partners
agreements with, 533
cost of capital for, 450
creation of, related to VC reputation, 65, 66
CVC as, 180, 219
definition of, 15
financial crisis and, 41
globalization of involvement by, 810, 813, 815
international allocation determinants of, 18–26, 19–20 table 1.1, 24 fig. 1.2, 27 fig. 1.3, 28, 29, 31, 32
moral hazards of, 532
regional assessment of, 795
relationship with VC firms, 84, 133, 178, 202.n17, 451, 613, 629
selection process of, 16
liquidation
and firm’s
assets, 331, 362, 382, 499
cash flow, 387, 499
and start-up commitment to, 224
as exit for venture capital investment, 1, 67, 408, 490, 494, 498
decision, 308, 512
preference rights, 424 table 14.1, 426–429, 428 table 14.3, 429, 431, 445.n2, 488 table 16.2, 492, 544, 596, 798
and cumulative dividends, 493–494, 493 fig. 16.3, 503
in Germany, 579, 580, 582
Ljungqvist, Alexander
“captured” borrowers, 322.n6
high returns on high-tech SMEs, 752
studies of VC participation and firm performance, 766 table 25.2
Lockett, Andy
establishing deal flow, 304
performance-related functions of VC syndication, 403–404 table 13.1
reasons that VCs syndicate, 305
syndication and information asymmetry, 901
two-sided matching of VC and entrepreneur, 898
VC and local bias when investing alone, 926
VC as a network-based economic community, 406
Loughran, T.
high returns on high-tech SMEs, 752
long-term performance of VC-backed and non-VC-backed IPOs, 775, 777
pricing and performance of IPOs, 752
studies of VC participation and firm performance, 762–763 table 25.2
VC reputation, 78, 85 n. 2, 85 n.3
Loutskina, E.
benefits of CVC financing on portfolio firms, 242.n8
(p. 1016) CVCs create value in early investment in new technology start-ups, 222
early-stage financing and deal terms, 224, 234
MacIntosh, Jeffrey G.
Canadian government program to foster VC, 792
crowding-out effect in Canada, 827
economic benefits of VC, 824
excessive capital and lower returns, 901
financial crisis and VC market, 41
public funds crowding out VC funds, 57
publicly sponsored private equity initiatives, 971
secondary purchases, 641
tax incentives and VC funds, 241
VC exits, 868, 889
VC investment and market conditions, 321
MacMillan, Ian C.
benefits of CVC, 193
CVC studies, 172 table 5.2, 173
entrepreneurial experience and attracting funding, 315, 319
essential assessment criterion, 313
importance of business plans, 317
importance of entrepreneur and VC assessment, 323.n11
post-investment activities studies, 727 table 24.1
VC post-investment involvement and value added, 722, 723, 724
VC selection, 30, 31, 133
Madhavan, Rav
regional development of VC, 10
transnational technical communities, 817
VC globalization literature, 812 table 27.1
Majiluf, N.
pecking order theory, 330, 332
tangible assets of firms, 331
securities payoffs, 311
Mäkelä, M. M.
CVC expansion, 200
twenty-minute rule for location of VC and portfolio firm, 897
two-sided matching of VC and entrepreneur, 898
Manaster, S.
studies of VC participation and firm performance, 765 table 25.2
VC reputation, 61, 64, 78, 85 n.3
VCs have reputation capital, 757
Manigart, Sofia
assessment criteria for European VCs, 322.n10
characteristics sought by VCs in portfolio firms, 329
debt capacity and finance decisions, 383
equity investors and adding value, 383
financial crisis and VC activity, 8
incremental finance decisions in VC-backed firms, 385
information processing of VCs and angels, 381
leverage ratios of VC- and non-VC-backed firms, 338
likelihood of a firm issuing additional financial debt, 394
literature on entrepreneurial firms and financial statement information, 689 table 23.1
more experienced VCs syndicate less frequently, 307
performance-related functions of VC syndication, 403 table 13.1
rate of return of European VC, 382
reluctance of entrepreneur to solicit outside finance, 378
risk evaluation skills, 407
sharing and management of experience, 407
syndication and information asymmetry, 901
twenty-minute rule for location of VC and portfolio firm, 897
VC and local bias when investing alone, 926
VC- and non-VC-backed firms and growth, 333
VC-backed companies and failure rate
VCs and due diligence, 378
market
and the financial crisis, 40–41, 55, 56
-based skills, 276
book-to-, benchmark, 266,
conditions, 320–321, 388
crash
of 1987,163
of 2000,574, 580, 583, 584, 585, 597, 598, 599, 607
financial, 23
housing, 39
index, 466
international, 173, 174, 178, 553,
IPO, 21, 25, 54, 58.n1, 75, 78, 211, 314, 603, 617, 640, 648, 751–788, 833, 834
financial crisis and, 41, 162
in Korea, 751–788
in Poland, 974
labor, 23
regulations on, 23, 839, 840, 864
local, experience of VC with, 28
liquidity, 22
making, 307, 322.n4, 674
new products, 133, 173, 174, 177, 178
PIPE, 246, 248, 249–250, 255, 258, 260, 270nn. 2, 3, 20
private equity, 898
German, 572, 575, 597
private placement, 270.n3
public capital, 17, 18, 22, 222, 641, 642, 648, 653
public equity, 21, 22, 257, 269, 647, 736, 744, 747, 967
research studies of, 319
return, 431, 450, 451, 452, 455, 460 table 15.3, 475.n8, 852
below-market, 470, 473
risk, 306, 314, 450, 452, 452, 455, 462, 468, 469, 473, 475nn.15, 17, 476nn.22, 23, 24, 725
risk capital, 17, 26
securities, 213
shares
(p. 1017) and league-table rankings as reputation measures, 62–63, 64, 67, 73 table 3.2, 83
VC IPO, 69, 70, 71, 72, 76, 79, 80, 81, 82, 85, 86nn.14, 17, 89–129 table 3.5
social, 281, 283
standard deviation of, 452, 475.n18
stock, 21, 22, 31, 38, 57, 213, 214, 436, 800, 834, 850, 864
reactions to CVC announcements, 223–234, 242.n6, 243.n11
timing, 149
-to-book ratio, 74, 79, 83, 86.n11, 266, 270.n1
value, 471, 515, 659,
values, terminal, 431
venture capital, 22, 37, 38, 39, 57, 85.n9, 165, 176, 191, 212, 425, 474.n6, 478, 479, 547, 582, 642, 833, 889, 901, 911, 947
CVC funds in, 221
declining, 54
European, 642
financial crisis and, 42–53, 54, 55, 56, 162
German, 579, 583, 643
government stimulus packages and, 58, 215–218, 241
growth of, 214
in California, 500, 501, 941
in Poland, 972, 974
international 200
role of corporations in, 237
VIPE, 246, 250–253, 254–256, 254 fig. 7.1, 256 table 7.1, 258, 269
volatility, 354, 355, 358, 359, 363, 367, 369
as a variable, 361–362 table 11.1, 365 table 11.2, 368 table 11.4
market model in logs, 425, 431, 432, 435, 440, 443, 444, 445
Mason, Colin M., 56
access to finance for SMEs, 966
angels compared to VCs, 722
angels invest in early stages of venture, 725, 741
assessment criteria for U. K. bankers, VCs, and angels, 322.n10
assistance for making firms investment-ready, 968
challenges and problems in financial marketplace, 968
firms not investment ready, 968
government programs for SMEs in developed countries, 971
post-investment activities studies, 727 table 24.1
public authorities and assistance for SMEs, 968
role of referrals in screening of proposals, 315
Masulis, Ronald W.
corporate venture capital, 651
CVC post-investment, 185, 186, 187
CVC studies, 172 table 5.2
CVCs’ differences from VCs, 546
differences in VC from U. S. to Europe, 630
impact of corporate VCs in syndicate, 542
information advantages of VCs, 767
investment stages and returns, 233
IPO firms and VC firms affiliated with banks, 768
literature review of, 652 table 21.3
start-ups and assignment of board seats, 219
studies of VC participation and firm performance, 766 table 25.2
VC involvement in CVC deals, 223
VC reputation, 7, 61, 62, 63, 66, 85, 86 n.10
Mathews, Richmond D.
CVC activity, 201
strategic alliances, 655
testing of financial contract theory, 482
Maula, Markku V. J.
CVC activity, 157
CVC globalization, 200
CVC parent wanting new markets, 221
CVC performance, 193, 194
CVC postinvestment, 185, 186, 187
CVC studies, 172 table 5.2
twenty-minute rule for location of VC and portfolio firm, 897
two-sided matching of VC and entrepreneur, 898
Mayer, C.
advantages of stock market-based financial system on IPO exit, 767
economic benefits of VC, 824
reputation and governance issues of Korean high-tech SMEs, 753
McNally, K.
CVC deal flow, 184
CVC funding, 180, 189
CVC goals, 178
CVC investment, 202.n18, 203.n24, 204.n36
CVC performance, 193, 194, 195
CVC post-investment involvement, 185, 186, 188
CVC studies, 172 table 5.2, 174, 200
Meckling, William H.
banks as lenders compared to VC, 798
debt and agency costs, 330
limited liability of shareholders, 331
VC contracts and agency problems, 511
VCs and agency problems, 356, 357
Megginson, William L.
cost of IPOs and VC-backed firms, 604
deal flow expectations, 23
domestic lead investor, 360
investment bankers reputation, 85 n.3
lawyers certifying, 610
literature on going public, 644 table 21.1
measure of VC backing, 771
reputation of VC, 550
studies of VC participation and firm performance, 760 table 25.2
underwriter reputation, 771
VC measure of success, 902
VC reputation, 61, 62, 67, 69, 70, 71
VCs add value to entrepreneurial firms, 642
(p. 1018) mergers and acquisitions (M&A)
as a growth strategy, 637
as a reflection of market maturity, 22
as a way to gain innovations, 171, 189, 628, 657, 661, 656
as an exit from investment, 637, 638 fig. 21.2, 640, 642, 883, 884, 885, 888, 889 table 29.10, 891 table 29.12, 927, 928, 932
as an interdependence between CVC and R&D, 188
as an investment mechanism, 203.n32, 648
as funding for R&D, 648, 656
CVC and, 649, 656
financial and legal advisor expertise, measure of, 63
firms with experience in, 61, 815
geographic proximity and, 902
globalization of, 815
industry-specific variables and, 892
information asymmetry in, 649
IPO firms and, 647, 648
of innovative companies, 656–658
of technology-oriented companies, 661
practices of law firms, as a measure of reputation, 62
regional perspective on, 876, 877
Metrick, Andrew
overview of VC market, 425
preference rights, 426
VC management fee, 4
Meyer, Alan D.
CVC in information and telecommunication, 176
CVC parent industries, 175
CVC studies, 172 table 5.2
mezzanine investment, 1, 2, 984
Michaelas, N.
corporate tax paid and debt, 334
EBITD and sales, 337
growth opportunities of firms, 337
low levels of debt and investment opportunities, 333, 350.n4
relationship between volatility and debt, 333
Milgrom, Paul
governance issues, 515
history of multinational corporations, 234
moral hazard issue, 512
moral hazard issue, 513
VC reputation, 61
Moore, John
costs of syndication, 549
strategic alliances, 655
VC contract theory, 504.n7
VC contracts in Germany and the U. S., 581
moral hazards, 513
alliances and, 653, 654
angel investors and, 725
bondholders and shareholders, 331
double, 852
entrepreneurs offering stakes and, 303, 357, 379, 380, 381, 629, 748
firms entering alliances and, 238, 239
in German firms, 827
staged financing and, 630, 914
syndication and, 549
VC
contracts and, 513, 532
monitoring and intervention and, 669, 898, 900 See also adverse selection; agency problems; asymmetric information
Moskowitz, T. J.
home country bias, 898, 899, 900, 902, 909, 934.n15
local bias and mutual fund industry, 932, 933.n9
local bias and radius of Earth in kilometers, 933.n6
Murfin, D. L.
CVC and VC acceptance, 191
CVC M&A strategy, 190
CVC objectives, 173
CVC structure, 179
CVC studies, 172 table 5.2
Murray, Gordon C.
CVC studies, 172 table 5.2
CVC venture performance, 194
unique services of CVCs, 193
VC development patterns, 846
VC fund performance in EU and U. S., 877
Myers, Steward C.
debt and agency costs, 330
low levels of debt and investment opportunities, 333
option of internal funding, 378
pecking order and financing decisions, 379
pecking order theory, 330, 332, 350.n2
securities payoffs, 311
tangible assets of firms, 331
Nahata, Rajarishi
corporate venture capital, 651
CVC post-investment, 185, 186, 187
CVC studies, 172 table 5.2
CVCs’ differences from VCs, 546
differences in VC from U. S. to Europe, 630
impact of corporate VCs in syndicate, 542
investment stages and returns, 233
literature review of, 652 table 21.3
reputation measures, 81, 83, 85, 86.n17
start-ups and assignment of board seats, 219
VC involvement in CVC deals, 223
VC reputation, 62, 64, 65, 66, 68 table 3.1, 69, 70
predicting subsequent IPOs, 73
Narayanan, V. K.
“open innovation” emphasis, 213
corporate development of innovation, 220
scholarly interest in CVC, 242.n3
success of CVC tied to management models, 221
Nielsen, S. B.
capital gain taxes, 832
(p. 1019) government support and VC risk, 827
local bias and mutual fund industry, 932
North, David
access to finance for SMEs, 966
challenges and problems in financial marketplace, 968
firms not warranting financing, 968
O’Donoghue, Ted
commitment devices, 522
immediate costs and delayed benefits, 519
information processing, 525
overconsumption scenario, 520, 521
welfare losses, 522
Oakey, Ray
assistance for making firms investment-ready, 968
challenges and problems in financial marketplace, 968
firms not investment ready, 968
need for government assistance programs, 971
two key moments when firms need finance, 967
VC financing of SMEs, 967
Ozkan, A.
debt trade-off theory, 330
low levels of debt and investment opportunities, 333
natural logarithm of sales, 336
profitability, 337
size of firm and level of debt, 332
tax effects, 337
operational debt
affected by information asymmetries, 381, 382
and suppliers’ cooperation, 383, 384, 397.n1
as a dependent variable, 385, 386 table 12.2, 390 table 12.4, 392, 393 table 12.5, 394
compared to financial debt, 378, 395, 396
increasing over time, 391
replacing outside financing, 379, 389
ownership structure
of Houston Wire and Cable Company, 622.n19
of Korean venture capital companies, 767
of VC-backed firms in Germany, 571–601
patent value funds
as finance, 627, 628 fig. 21.1, 661
definition of, 658–659
payout profiles, 430 fig. 14.2, 431, 433, 434, 440, 443
nonlinearity of, 438
pecking order theory
extended, 383
in young and high-tech companies, 383
of finance choices, 330, 331, 347, 348, 349, 379
outlined, 382
theory2, 330
of ventures’ resource dependency, 184
Petersen, Bruce C.
banks granting credit to firms with high default rate, 383
financing needed for high-tech and R&D-intensive industries, 629
information asymmetry and access to financing, 379
lack of collateral in young ventures, 380
Petersen, Mitchell A.
importance of supplier financing, 383
operational debt, 378
suppliers’ equity stake, 380, 381
Pfleiderer, Paul C.
agency problems affect monitoring and staging, 354
contracting from agency theory perspective, 423
performance-related functions of VC syndication, 404 table 13.1
preventing abuse of information asymmetrics, 406
staged financing, 383
syndication and strategic pricing issues, 305
VCs syndicate investments, 757
Pindyck, Robert S.
commitment devices, 521
external market uncertainty, 359
real options approach, 445.n5
real options perspective, 358
staging decisions, 358
PIPEs
definition of, 246, 249
contracts, 250, 260–261, 271nn. 10, 11, 20, 272nn.21, 22
issued in U.S., 255
1995–2008, 253–254
market, 249–250
performance of, 251, 266, 267–268 table 7.7
registered directs and, 279.n3
returns of issuers leading up to, 258
selection for investment, 252–253,
VC investment in, 256 table 7.1, 270.n1
Popov, Alexander
biotech industry growth, 879
importance of early stage VC involvement, 632
VC encourages innovation and patents, 633, 634 table 21.1, 637
Powell, W. W.
geographic location of the portfolio company, 133
lack of innovation in Atlanta area, 791
VC’s human capital 132
preference rights
and the CAPM, 444, 445
and the market model in logs, 444, 445
dividend, 426, 427
literature on, 424 table 14.1
valuation of, 423, 425
for entrepreneur, 443
for VC, 426, 427 table 14.2, 428 table 14.3, 429, 437, 445.n1
private equity
after leveraged buyouts, 516
and exit potential, 865
(p. 1020) and innovation projects, 235
and VC IPO market share, 76
closed-end fund regulation and, 828, 829–830 table 28.1
compared to philanthropic VC. 279
compared to VIPEs, 252
contract negotiations and, 485
cost of capital for, 451
definition of, 1, 2, 11
entrepreneurial firms and financial statements, 688–693 table 23.1
financial crisis and, 236
financing of, 747, 989 fig. 32.5
German market for, 575, 576–578 table 19.1, 579, 580 fig. 19.1
government support and, 969–970 table 32.1, 971
in Poland, 974, 975 fig. 32.1, fig. 32.2
liquidity gap and, 984
investing skill and, 819
investors and VC reputation, 63, 65, 83
non-cash, 946
performance of VC funds and, 3 fig. I.1, fig. I.2.a, 5 fig. I.3, fig I.4, 6 fig. I.6
publicly traded (listed), 18
returns to, 4 fig. I.2.b, 6 fig. I.5, fig. I.6, 450, 795
valuation in, 474.n2
VentureXpert database of, 201.n6, 866, 869–875 table 29.2
Prowse, Stephen
angels invest in early stages of venture, 725, 741
angels’ choice of investment target, 734
angels’ ownership share 744
bank investment in a firm can reduce agency costs, 768
debt levels and nondebt tax shields, 334
post-investment activities studies, 727 table 24.1
tangible assets of firms, 331
Puri, Manju
economic benefits of VC, 824
innovators and product marketing, 633
investor characteristics in VC contracts, 499
management replacement, 631
studies of VC participation and firm performance, 765 table 25.2
value-added benefits of syndication, 322.n1
VC board seats, 495
VC encourages innovation and patents, 636 table 21.1
VC impact on innovation, 672 table 22.1, 674
VC monitoring, 531
VCs add value to portfolio firms, 757
VCs help place key personnel, 669
Rabin, Matthew
commitment devices, 522
immediate costs and delayed benefits, 519
information processing, 525
overconsumption scenario, 520, 521
welfare losses, 522
Rajan, Raghuram G.
debt vs. equity, 336
importance of supplier financing, 383
IPO firms and VC firms affiliated with banks, 768
natural logarithm of sales, 336
operational debt, 378
size of firm and level of debt, 332
size of firm and probability of default, 332
suppliers’ equity stake, 380, 381
tangible assets, 336
value of information about a company, 374
Rangan, K.
debt trade-off theory, 330
natural logarithm of total assets, 336
profitability, 337
tangible assets, 336
tax effects. 337
Ravid, S. Abraham
California style VC contracts, 500, 501
cash flow and control rights in VC contracts, 497
data gathering on VC contracts, 484
distance between VC and portfolio firm affects contract terms, 499
regional differences in VC contracts, 941
VC contracts study, 505.n14
VC investment literature summary, 942 table 31.1
Raviv, Artur
capital structure of firms, 329, 331, 350.n1
cash flow contingencies in VC contracts, 487, 489
relationship between volatility and debt, 333
VC contract theory, 504.n7
VC contracts study, 480 table 16.1
redemption rights
included in contracts, 498
in California, 500
in Germany, 579
used to control terms of exit, 220, 240, 494
research & development (R&D)
activity in “hot” states, 914, 915, 928
agency costs and, 364, 655, 657, 658
alliances and, 161, 654
and exits, 885 table 29.7, 886 table 29.8, 887 table 29.9, 888, 889 table 29.10, 890 table 29.11, 891 table 29.12, 892, 893
and intellectual property rights, 659
as an aspect of investor’s decision, 23
acquisitions and, 647, 661
corporate venturing and, 648, 649, 661, 670, 671–673 table 22.1, 797–800,
financing for
correlated with VC activity, 24, 56, 188, 190, 242.n8, 628 fig. 21.1, 631, 632, 648, 653, 701, 774, 824, 834, 838, 846, 881, 882
for high-growth start-up firms, 628, 629, 630, 631
in Poland, 988
other options for, 642
prior to and immediately after CVC, 197
(p. 1021) internal, and external sources of innovation, 164, 174, 175, 177, 178, 180, 189, 199
mergers and acquisitions and, 656–658
outcomes not supported by core business, 234, 235
patent production and, 216, 627, 633, 647, 659
pure biotech, 462
in Europe, 880
Silicon Valley and, 212
technology firms and, 643, 754
trade sales and, 640
value added from VC, 221, 643
real options
and market-to-book equity ratio, 74
and VC staging decisions, 354, 359, 368, 514, 534
as an approach to value common and preferred shares, 425, 437–438, 440
theory, 8, 355, 358, 655
return
aftermarket high initial return, 752
angels and, 740, 742, 743
buy-and-hold, 769–770, 775
CAPM and, 433–434
cash-on-cash ratios of, 66
CVCs and 173, 174, 238
acquirer’s average cumulative abnormal, 190
environmental, 278, 279
IPO first-day, 78, 774
VC-backed in Korea, 777, 780, 782 table 25.6
IRR, 5 fig. I.4, 66, 67, 198, 742
issuer long-run abnormal stock, 75
market, 431
market model in logs, 435
of limited partners with reputable VCs, 65, 148
on assets, 74, 83
on philanthropic VC, 175, 283
on R&D, 235
participation cap and, 492, 493 fig. 16.2
PIPE and, 251,252,
post-IPO stock, 61
preference rights and, 445.n1
priority minimum, 427
private equity, 4 fig. I.2.b, 679
required rates of, 448–477
risk and, 426, 436, 438, 439 table 14.6, 831
social, 176, 278, 279, 280, 282, 283, 296, 297
stock, 230–233 table 6.2
to Internet-related ventures, 167
twenty-day cumulative market index, 772
VC, 3 fig. I.2.a, 130, 131, 322.n3, 356, 380, 382, 445.n6, 517, 613, 641, 680, 816
and type of securities chosen, 186
globalization and, 819, 858
in Germany, 792
VIPEs and, 248, 258, 266, 267–268 table 7.7, 269, 270nn. 1, 7
Rind, K. W.
CVC allocation, 181
CVC in competing business, 203.n23
CVC studies, 172 table 5.2
risk indicators, 598, 599
quantitative measures of, 582, 583, 584
risk preference approach to value shares, 425, 432, 436–437, 443, 444, 445
Ritter, Jay R.
high returns on high-tech SMEs, 752
historic averages of IPOs, 143, 152.n5
IPO gross proceeds, 70
IPO market, 58.n1
long-term performance of VC-backed and non-VC-backed IPOs, 775, 777
pricing and performance of IPOs, 752
studies of VC participation and firm performance, 762–763 table 25.2
VC reputation, 78, 85 nn.2, 3
Rivoli, P.
higher underpricing in cold market, 784
long-term performance of VC-backed and non-VC-backed IPOs, 777
overvaluation of IPOs at initial stage, 781
studies of VC participation and firm performance, 763 table 25.2
Riyanto, Yohanes E.
advice and support of VC in firms, 682.n2
CVC seeding complementary markets, 200
reason for adoption of CVC, 221
Robbie, Ken
equity investors handling information asymmetry issues, 380
importance of entrepreneur and VC assessment, 323.n11
investment decision criteria, 30
VC can certify and add value to IPO firms, 752
Roberts, John
history of multinational corporations, 234
moral hazard issue, 512
VC reputation, 61
Robinson, David T.
CVC alliances, 161
CVC-entrepreneur relationship, 201
strategic alliances, 655
testing of financial contract theory, 482
Rodriguez, Daniel
corporate venture capital, 649
M&A agency considerations, 657
M&A in innovative firms, 656
Romain, Astrid
R&D activity, 24
VC activity and economic growth, 21
VC and regional economy studies, 805 table 26.2
VC and the “absorptive capacity” of a region, 797
VC encourages innovation and patents, 635 table 21.1
VC investment spurs economic growth, 632
Roosenboom, Peter
biotech industry growth, 879
importance of early stage VC involvement, 632
VC encourages innovation and patents, 633, 634 table 21.1, 637
(p. 1022) Rowley, Chris
access to capital in emerging markets, 971
economic development in emerging markets, 971
government attention to SMEs, 972
legal infrastructure of emerging markets, 971
Ruhnka, J. C.
information asymmetry in VC investments, 354
lowering of project-specific uncertainty, 363
uncertainty in VC investments, 358
VC investment and chance of successful exit, 356
Sahaym, A.
CVC activity, 199
CVC and parent firm industry, 175
CVC studies, 172 table 5.2
Sahlman, William A.
agency risks, 513
and monitoring of targets, 483
boom periods of investment, 534
corporate governance, 544
economic benefits of VC, 834
firm strategy, 133, 136
human capital, 149, 152.n2
information asymmetry in VC investments, 354
likelihood of loss, 853
overview of VC market, 425
overview of, 504nn.5, 6
post-investment activities studies, 727 table 24.1
staged financing, 381
staged financing, 514
tailor-made contracts, 381
two-stage agency relationship between VC and portfolio firm, 629
uncertainty in VC investments, 358, 369
use of convertible shares, 798
VC contracts
VC development in Germany and Japan, 839
VC human capital, 132
VC investment and stimulating growth, 794
VC investment and uncertainty, 355, 356
VC invests in portfolio companies in stages, 354
VC objectives, 130
VC time spent with portfolio firms, 723
VC’s tasks, 799
VCs management support, 369.n1
VCs stage capital infusions to minimize risk, 757
venture capital method, 432
Samila, Sampsa
legal environment for VC activity, 801, 802
R&D and VC impacts, 799
regional perspective on VC, 10
social capital, 803
U. S. regional economy growth and VC investment, 795, 796
VC and regional economy studies, 805 table 26.2
Sapienza, Harry J.
angels’ post-investment involvement, 737
benefits of syndication, 547
contractual terms to deal with agency problems, 721
entrepreneurs and VC advice, 724
equity investors and adding value, 383
international VC behavior, 748
investor confidence and VC activity, 23
post-investment activities studies, 728 table 24.1
twenty-minute rule for location of VC and portfolio firm, 897
VC post-investment involvement (PII), 722, 723
VC value-adding activities, 723
VCF investment strategies, 133
VCs and due diligence, 378
VCs learn from past investments, 739
Saxenian, AnnaLee
California style VC contracts, 501
high-tech industry and social networks, 401
industry clustering, 133
social capital, 802
VC as a network-based economic community, 406
Scarlata, Maria Rosa
maximizing social return on investment, 276
philanthropic VC differs from socially responsible investments and private equity, 279, 298.n2
philanthropic VC, 8
Schertler, A.
European VC, 834
labor market rigidities, 839
VC activity, 24
Schmidt, Klaus M.
advice and support of VC in firms, 682.n2
contracting from agency theory perspective, 423
effort provisions in VC contracts, 504.n8
VC contracts, 545
Schoar, Antoinette
advice and support of VC in firms, 682.n2
effects of U. S. legal and institutional factors on VC contracts, 479
financial contracting, 571
measures of VC reputation, 64, 65, 67, 68 table 3.1
preference rights study, 434 table 14.1
return persistence, 252
selection of funds, 26
track record dictates future potential, 28
VC and stock market waves, 21
VC compensation, 483
VC in developing countries, 22, 23
VC performance persistence, 6
Schweinbacher, Armin
advice and support of VC in firms, 682.n2
angels compared to VCs, 722
CVC activity, 200
preference rights study, 434 table 14.1
reason for adoption of CVC, 221
twenty-minute rule for location of VC and portfolio firm, 897
use of convertible, 630
secondary sales, 1, 41
(p. 1023) Secrieru, Oana
Canadian VCs, 547
imperfections in finance marketplace, 968
public authorities and assistance for SMEs, 968
Seim, Martin
IPO waves in Europe, 640
relative shares of venture-backed IPOs in U. S. and Europe, 638
VC value added, 9
Sensoy, Berk A.
cash flow and control rights in VC contracts, 497, 499
data gathering on VC contracts, 484
due diligence and contracts, 311
financial contracting, 599
issuer characteristics in VC contracts, 498
renegotiations in VC contracts, 503
time-series changes in VC contracts, 501
VC contracts study, 480 table 16.1, 505.n14
VC monitoring can replace some contract terms, 499
Seppä, Tuukka J.
benefits of syndication, 547
effects of syndication, 542
VC-backed firms’ equity values and returns, 687
Shachmurove, Emanuel
regional VC activity, 11
VC industry choice, 941
VC investment literature summary, 943, 944 table 31.1
Shachmurove, Yochanan
regional VC activity, 11
transportation cost and welfare of a country, 941
VC industry choice, 941
VC investment literature summary, 943, 944 table 31.1
Shane, Scott
financial innovation, 658
social capital, 803
university-based entrepreneurship and VC presence, 799
VC and regional economy studies, 805 table 26.2
Shapira, Zur B.
compensation schemes of CVCs, 223
CVC compensation schemes, 196
CVC governance, 178, 182
CVC studies, 172 table 5.2
M&A activity, 203.n32
poor results of government CVC divisions, 219
Sharifzadeh, Azin
costs of syndication, 549
interaction of syndicate members, 542
VC syndication, 9
Shaver, J. Myles
CVC studies, 172 table 5.2
CVC demand enhancement, 177
CVC-entrepreneur relationship, 184
CVCs competing with independent VCs, 192
data sources, 201.n6
intellectual property rights, 185
Shepherd, D. A.
local bias, 900
VC human capital, 132
VCs’ overconfidence, 316
Siegel, R.
CVC activity and cultural asymmetry, 187
CVC and M&A activity, 190
CVC objectives, 173
CVC performance, 195
CVC pre-investment, 183
CVC selection, 184
CVC structure, 179
CVC studies, 172 table 5.2, 200
deal flow and parent firm industry, 185, 203.n27
Silverman, Brian S.
issuance of additional equity and firm stability, 394
post-investment activities studies, 726 table 24.1
VC adds value to new ventures, 724
VCs and scouts and coaches, 30
Smith, Richard L.
circularity problem of valuation, 434
contracting, 9
illiquidity premiums, 474.n5
preference rights and valuation, 423
purchase discount from purchase if PIPE, 261
VC reputation, 65, 66, 67, 68 table 3.1
Sogorb-Mira, F.
capital structure of firms, 329
debt trade-off theory, 330
debt vs. assets, 336
natural logarithm of total assets, 336
profitability, 337
relationship between profitability and debt ratio, 332
tangible assets, 336
tax effects. 337.
Sørensen, Morten
due diligence informs about portfolio firm and the VC fit with it, 321, 323.n17
measures of VC reputation, 64, 67, 68 table 3.1
CVC performance, 192, 194
postinvestment activities studies, 728 table 24.1
tax effects, 337
VC adds value to new ventures, 724
VC selection of targets, 794
Sorenson, Olav
biotech ventures encouraged by VC, 799
data sources, 42, 201.n6
geographic limitations of VC activity, 799
geographic location and portfolio firm selection, 133
CVC networks, 192
human networks and VC, 815
increased affiliation decreases spatial limitations, 621.n3
IPO as success, 364
legal environment for VC activity, 800, 801, 802
local bias and nautical middles, 933nn. 6, 8
local bias for investment and syndication, 941
managerial support of VCs, 369.n1
performance-related functions of VC syndication, 403 table 13.1
(p. 1024) R&D and VC impacts, 799
social capital, 803
spin-offs, 794–795
successful VC model, 603
syndication over distances increases geographic markets, 405
U. S. regional economy growth and VC investment, 795, 796
VC and regional economy studies,