The dynamics of venture capital contracts

We analyze the degree of contract completeness with respect to staging of venture capital investments using a hand-collected German data set of contract data from 464 rounds into 290 entrepreneurial firms. We distinguish
We analyze the degree of contract completeness with respect to staging of venture capital investments using a hand-collected German data set of contract data from 464 rounds into 290 entrepreneurial firms. We distinguish three forms of staging (pure milestone financing, pure round financing and mixes). Thereby, contract completeness reduces when going from pure milestone financing via mixes to pure round financing. We show that the decision for a specific form of staging is determined by the expected distribution of bargaining power between the contracting parties when new funding becomes necessary and the predictability of the development process. To be more precise, parties choose the more complete contracts the lower the entrepreneur's expected bargaining power - the maximum level depending on the predictability of the development process. JEL Classification: G24, G32, D86, D80, G34
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Metadaten
Author:Carsten Bienz, Julia Hirsch
URN:urn:nbn:de:hebis:30-26076
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2006,11
Series (Serial Number):CFS working paper series (2006, 11)
Document Type:Working Paper
Language:English
Year of Completion:2006
Year of first Publication:2006
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2006/05/08
Tag:contract econometrics; contract theory; corporate governance; empirical contract theory; moral hazard; renegotiation; venture capital
SWD-Keyword:Corporate Governance; Risikokapital; Vertrag
HeBIS PPN:195434366
Institutes:Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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