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date: 04 July 2020

Abstract and Keywords

This article explores the role of lawyers in the venture capital industry. It addresses two interrelated topics: how lawyers factor into venture capital networks and the role of equity investments by Silicon Valley law firms in the companies they represent. The structure of the article follows the parallel tracks of network effects in venture capital and equity investments by lawyers in client companies, tying them together at appropriate points. First it explores the existing literature in these two fields. Next it develops a theoretical framework for lawyers as a part of venture capital networks and for lawyers taking equity investments in clients, concluding with why the two may be interrelated. The final section includes empirical results from data gathered by the authors of initial public offerings from a one-year sample in 2006–2007 as well as three years for specific venture capital law firms and venture capital funds. Aside from linking equity investment and network effects, these results are quite unlike what has been analyzed by other authors. The article offers a more comprehensive survey of Silicon Valley law firms and venture capital funds, as well as a more rigorous comparison to what law firms are doing in other geographical and industry spaces. It concludes with a discussion of the study's limitations and suggestions for further research.

Keywords: lawyers, venture capital industry, Silicon Valley law firms, venture capital networks, equity investments, initial public offerings

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