When are venture capital projects initiated?

Li, Yong; Mahoney, Joseph T.

doi:10.1016/j.jbusvent.2009.08.001

Cited by 52 publications

(30 citation statements)

References 84 publications

(109 reference statements)

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“…This more nuanced approach to analyzing the contingent role of portfolio configuration in project withdrawal provides important discriminating evidence for real options predictions (Dixit andPindyck, 1994, 2000;Folta, 2005;Trigeorgis, 1993). Overall, our empirical findings affirm the value added of the real options approach in strategy and entrepreneurship (see also Li and Mahoney, 2011;Vassolo et al, 2004).…”

supporting

confidence: 71%

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Venture capitalists' decision to withdraw: The role of portfolio configuration from a real options lens

Chi

2013

Strategic Management Journal

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supporting

confidence: 71%

“…Our uncertainty measure is industry specific and time varying. See also Brav and Gompers (1997), Folta, Johnson, and O'Brien (2006), and Li and Mahoney (2011). Data are collected from CRSP.…”

Section: Independent Variablesmentioning

confidence: 99%

Venture capitalists' decision to withdraw: The role of portfolio configuration from a real options lens

Chi

2013

Strategic Management Journal

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“…Examining smaller entrepreneurial businesses, Li (2008) finds that market uncertainty encourages venture capital firms to delay investing, whereas competition and agency concerns prompt venture capital firms to invest sooner. Using data on venture capital investments, Li and Mahoney (2011) find that venture capitalists tend to defer new investment projects in target industries with substantial market volatility. Their examination of the effects of uncertainty on venture capital funding is important as smaller entrepreneurial businesses are often highly credit constrained from traditional sources, and have to rely on own cash-flows or venture funding (Baldwin, Gellatly and Gaudreault, 2002).…”

Section: Empirical Evidencementioning

confidence: 99%

Uncertainty and the Employment Dynamics of Small and Large Businesses

Ghosal

Yang

2015

IMF Working Papers

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We examine the impact of uncertainty on employment dynamics. Alternative measures of uncertainty are constructed based on the survey of professional forecasters, and regressionbased forecasting models for GDP growth, inflation, S&P500 stock price index, and fuel prices. Our results indicate that greater uncertainty has a negative impact on growth of employment, and the effects are primarily felt by the relatively smaller businesses; the impact on large businesses are generally non-existent or weaker. Our results suggest that to truly understand the effects of uncertainty on employment dynamics, we need to focus on the relatively smaller and entrepreneurial businesses. We discuss implications for the framing of economic policy. Terms of use: Documents in EconStor mayJEL-Code: L110, D800, O300, G100, L400.

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“…A distinct and specialized part of the investment market, the VC industry is predicated on taking investment risk by funding new, nascent firms without an established track record in exchange for equity and earning a return through “exit” events, such as an IPO, an acquisition, or a buy‐out (Gompers & Lerner, ; Li & Mahoney, ). Like other types of investors, VC firms stand or fall on their ability to earn a return on investments.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

Performance feedback as a cooperation “switch”: A behavioral perspective on the success of venture capital syndicates among competitors

Makarevich

2018

Strategic Management Journal

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Research Summary: This study draws on the performance feedback theory to advance a behavioral perspective on the dynamics of cooperation among competitors in venture capital (VC) syndicates. Analyzing VC syndicates over a 33‐year period, I find that firms’ performance relative to historical and social aspirations acts as a switch in firms’ behavior with respect to dual goals of cooperation and competition in syndicates with competitors. Competition among firms in a syndicate negatively affects the probability of an IPO, but syndicates composed of firms underperforming their aspirations have a better chance of an IPO than syndicates of firms outperforming their aspirations, ceteris paribus. This effect is stronger when firms’ goals in a syndicate are symmetrical or when firms’ motivations based on both historical and social aspirations are aligned. Managerial Summary: Competition among VC syndicate members negatively affects a syndicate’s prospects of achieving an IPO because syndicate members hold back resources for fear of their appropriation by competing partners. However, firms underperforming their track record or peer firms shift their priorities toward syndicate success and allocate more resources to their syndicates, thereby reducing the negative effect of competition. These results suggest that start‐up companies seeking VC investors, VC firms seeking co‐investors, and limited partners providing funds to VC firms all need to look beyond the capabilities of VC firms in a syndicate or their complementarity and also consider firms’ relative performance. VC syndicates comprised of firms striving to correct temporary underperformance are likely to show superior results due to those firms’ added motivation.

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When are venture capital projects initiated?

Cited by 52 publications

References 84 publications

Venture capitalists' decision to withdraw: The role of portfolio configuration from a real options lens

Venture capitalists' decision to withdraw: The role of portfolio configuration from a real options lens

Uncertainty and the Employment Dynamics of Small and Large Businesses

Performance feedback as a cooperation “switch”: A behavioral perspective on the success of venture capital syndicates among competitors

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