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What Do Entrepreneurs Pay For Venture Capital Affiliation?

Name
What Do Entrepreneurs Pay For Venture Capital Affiliation?
Cite
59 J. Of Finance 1805
Year
2004
Bluebook cite
David H. Hsu, What Do Entrepreneurs Pay For Venture Capital Affiliation?, 59 J. Of Finance 1805 (Aug. 2004)

Author
David H. Hsu
URL
http://www.jstor.org.www.libproxy.wvu.edu/sici?sici=0022-1082(2004)59%3A4%3C1805%3AWDEPFV%3E2.0.CO%3B2-J&origin=serialsolutions&cookieSet=1
Item Type
article
Summary
This study empirically evaluates the certification and value-added roles of reputable venture capitalists (VCs). Using a novel sample of entrepreneurial start-ups with multiple financing offers, I analyze financing offers made by competing VCs at the first professional round of start-up funding, holding characteristics of the start-up fixed. Offers made by VCs with a high reputation are three times more likely to
be accepted, and high-reputation VCs acquire start-up equity at a 10-14% discount. The evidence suggests that VCs'" extra-financial"v alue may be more distinctive than their functionally equivalent financial capital. These extra-financial services can have financial consequences.

Excerpts and Summaries

Created
Tuesday 30 of June, 2009 15:18:19 GMT
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LastModif
Tuesday 30 of June, 2009 15:18:47 GMT
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