Publication Type
Journal Article
Version
submittedVersion
Publication Date
9-2007
Abstract
We propose a model that examines the optimal size of venture capital and private equity fund portfolios. The relationship between a VC and entrepreneurs is characterized by double-sided moral hazard, which causes the VC to trade off larger portfolios against lower values of portfolio companies. We analyze the structural relations between the VC's optimal portfolio structure and entrepreneurs' and VC's productivities, their disutilities of effort, the value of a successful project, and the required initial investment in a venture. We also test the model's predictions using a small proprietary dataset collected through a survey targeted to VC and private equity funds worldwide.
Keywords
Venture capital, Private equity, Fund portfolio
Discipline
Corporate Finance
Research Areas
Finance
Publication
Journal of Corporate Finance
Volume
13
Issue
4
First Page
564
Last Page
590
ISSN
0929-1199
Identifier
10.1016/j.jcorpfin.2007.04.004
Publisher
Elsevier
Citation
BERNILE, Gennaro; Cumming, Douglas; and Lyandres, Evgeny.
The Size of Venture Capital and Private Equity Fund Portfolios. (2007). Journal of Corporate Finance. 13, (4), 564-590.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/3665
Creative Commons License
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