On the Market for Venture Capital
Bibliographic Data
| ID | 10177986 |
|---|---|
| Authors | Boyan Jovanovic (New York University), Balázs Szentes (0009-0009-1552-4505, London School of Economics and Political Science) |
| Year | 2013 |
| Volume | 121 |
| Issue | 3 |
| Pages | 493-527 |
| Publication date | 2013-06-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/670359 |
| OpenAlex | W2173055794 |
| Language | EN |
| Citations received | 2 |
| References cited | 15 |
We propose a theory of the market for venture capital that links the excess return to venture equity to the scarcity of venture capitalists (VCs). High returns make the VCs more selective and eager to terminate nonperforming ventures because they can move on to new ones. The scarcity of VCs enables them to internalize their social value, and the competitive equilibrium is socially optimal. Moreover, the bilaterally efficient contract is a simple equity contract. We estimate the model for the period 1989–2001 and compute the excess return to venture capital, which turns out to be 8.6 percent. Finally, we back out the return of solo entrepreneurs, which is increasing in their wealth and ranges between zero and 3.5 percent
Business · Economics · Equity (law · Financial economics · Microeconomics · Scarcity · Social venture capital · Value (mathematics · Venture capital · Corporate Finance and Governance · Finance · Firm Innovation and Growth · Private Equity and Venture Capital
| Unique citing works | 2 |
|---|---|
| Citations per year | 0,17 |
| Citation span | 2014 - 2019 (6) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 2 |