Do venture capital firms benefit from a presence on boards of directors of mature public companies?

Do venture capital firms benefit from a presence on boards of directors of mature public companies? This paper examines the benefits to venture capital firms of their officers holding directorships in mature public companies in terms of fundraising and investment performance. Our empirical results show that venture capital firms raise more funds, set higher fund-raising targets, and are more likely to successfully exit their investments post-appointment of their officers to boards of directors of S&P 1500 companies. Directorship status in mature public firms provides venture capital firms with enhanced networks, visibility, and credibility, all of which facilitate their fundraising activities. In addition, the knowledge, expertise, and experience acquired through holding directorships in mature public firms are beneficial for their portfolio companies, as measured by the likelihood of successful exits. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Corporate Finance Elsevier

Do venture capital firms benefit from a presence on boards of directors of mature public companies?

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Publisher
Elsevier
Copyright
Copyright © 2017 Elsevier B.V.
ISSN
0929-1199
D.O.I.
10.1016/j.jcorpfin.2017.04.018
Publisher site
See Article on Publisher Site

Abstract

This paper examines the benefits to venture capital firms of their officers holding directorships in mature public companies in terms of fundraising and investment performance. Our empirical results show that venture capital firms raise more funds, set higher fund-raising targets, and are more likely to successfully exit their investments post-appointment of their officers to boards of directors of S&P 1500 companies. Directorship status in mature public firms provides venture capital firms with enhanced networks, visibility, and credibility, all of which facilitate their fundraising activities. In addition, the knowledge, expertise, and experience acquired through holding directorships in mature public firms are beneficial for their portfolio companies, as measured by the likelihood of successful exits.

Journal

Journal of Corporate FinanceElsevier

Published: Apr 1, 2018

References

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