Investment, Duration, and Exit Strategies for Corporate and Independent Venture Capital‐Backed Start‐Ups
Year: 2015
Type: article
Abstract: We propose a model of investment, duration, and exit strategies for start‐ups backed by venture capital (VC) funds that accounts for the high level of uncertainty, the asymmetry of information between insiders and outsiders, and the discount rate. Our analysis predicts that start‐ups backed by corporate VC funds remain for a longer period of time before exiting and receive larger investment amounts than those financed by independent VC funds. Although a longer duration leads to a higher likelihood of an exit through an acquisition, a larger investment increases the probability of an IPO exit. These predictions find strong empirical support.
DOI: 10.1111/jems.12097
Authors: Bing Guo, Yun Lou, David Pérez‐Castrillo
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
Funders: Northwestern University, University College Dublin, Generalitat de Catalunya, Consell Català de Recerca i Innovació, Ministério da Educação e Ciência, Institució Catalana de Recerca i Estudis Avançats, Ben-Gurion University of the Negev, Universidad Carlos III de Madrid, Agència de Gestió d'Ajuts Universitaris i de Recerca, Core Research for Evolutional Science and Technology
OpenAlex ID: W1835456102