International audienceWe consider the provision of venture capital in a dynamic agency model. The value of the venture project is initially uncertain and more information arrives by developing the project. The allocation of the funds and the learning process are subject to moral hazard. The optimal contract is a time-varying share contract which provides intertemporal risk-sharing between venture capitalist and entrepreneur. The share of the entrepreneur reflects the value of a real option. The option itself is based on the control of the funds. The dynamic agency costs may be high and lead to an inefficient early stopping of the project. A positive liquidation value explains the adoption of strip financing or convertible securities. Finally, relationship financing, including monitoring and the occasional replacement of the management improves the efficiency of the financial contracting

We consider the allocation of corporate control in a company with two large and a continuum of small shareholders. Control is determined in a shareholders' meeting, where the large shareholders submit competing proposals in order to attract the vote of small shareholders. The presence of multiple shareholders reduces private benefits through competition for control. In the optimal ownership structure, the more efficient blockholder will hold just enough shares to gain control, but a large fraction of shares is allocated to the less efficient shareholder in order to reduce rents. We investigate when the large shareholders would want to trade parts or all of their share blocks among them, and show that the concern about retrading will lead to a larger than optimal stake of the controlling shareholder.

This paper compares the success of venture capital investments in the United States and in Europe by analyzing individual venture-backed companies and the value generated within the stage …nancing process. We document that US venture capitalists generate signi…cantly more value with their investments than their European counterparts. We …nd di¤erences in contracting behavior, such as staging frequency and syndication, and evidence that they help to explain the observed performance gap and we report a substantial unexplained residual. We …nd that US venture funds investing in Europe do not perform better their European peers. European Common Law and Civil Law countries exhibit comparable levels of venture performance, and di¤erences in stock market development or tax subsidies in favor of venture investments are unrelated to performance di¤erences. European IPO exits from venture investments yield returns similar to the US, while trade sale exits weakly underperform. We attribute the overall performance gap essentially to the segment of poorly performing companies.