Journal of Corporate Finance Vol. 22 2013
On the role of inexperienced venture capitalists in taking companies public
Abstract
We use venture-backed initial public offerings (IPOs) to identify and examine the comparative advantage of inexperienced venture capitalists. We argue that, vis-a-vis more established counterparts, younger venture capital firms have a comparative advantage at producing soft information about relatively opaque start-up companies due to their organizational structure. We then quantify an outcome—IPO initial return—from the matching of venture capitalists and start-up companies that demonstrates how this comparative advantage arises. Our findings thus reveal an important aspect of how inexperienced venture capitalists support start-up companies.
- DOI
- 10.1016/j.jcorpfin.2013.06.004
- Volume
- 22
- Pages
- 299-319
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref