The size of venture capital and private equity fund portfolios

Gennaro Bernile; Douglas Cumming; Evgeny Lyandres

doi:10.1016/j.jcorpfin.2007.04.004

The size of venture capital and private equity fund portfolios

Gennaro Bernile^*, Douglas Cumming, Evgeny Lyandres

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

54 Scopus citations

Abstract

We propose a model that examines the optimal size of venture capital and private equity fund portfolios. The relationship between a VC and entrepreneurs is characterized by double-sided moral hazard, which causes the VC to trade off larger portfolios against lower values of portfolio companies. We analyze the structural relations between the VC's optimal portfolio structure and entrepreneurs' and VC's productivities, their disutilities of effort, the value of a successful project, and the required initial investment in a venture. We also test the model's predictions using a small proprietary dataset collected through a survey targeted to VC and private equity funds worldwide.

Original language	English
Pages (from-to)	564-590
Number of pages	27
Journal	Journal of Corporate Finance
Volume	13
Issue number	4
DOIs	https://doi.org/10.1016/j.jcorpfin.2007.04.004
State	Published - Sep 2007
Externally published	Yes

Keywords

Fund portfolio
G24
Private equity
Venture capital

Access to Document

10.1016/j.jcorpfin.2007.04.004

Cite this

@article{f2aa286e9f6744d18d8d11fd450a539e,

title = "The size of venture capital and private equity fund portfolios",

abstract = "We propose a model that examines the optimal size of venture capital and private equity fund portfolios. The relationship between a VC and entrepreneurs is characterized by double-sided moral hazard, which causes the VC to trade off larger portfolios against lower values of portfolio companies. We analyze the structural relations between the VC's optimal portfolio structure and entrepreneurs' and VC's productivities, their disutilities of effort, the value of a successful project, and the required initial investment in a venture. We also test the model's predictions using a small proprietary dataset collected through a survey targeted to VC and private equity funds worldwide.",

keywords = "Fund portfolio, G24, Private equity, Venture capital",

author = "Gennaro Bernile and Douglas Cumming and Evgeny Lyandres",

year = "2007",

month = sep,

doi = "10.1016/j.jcorpfin.2007.04.004",

language = "אנגלית",

volume = "13",

pages = "564--590",

journal = "Journal of Corporate Finance",

issn = "0929-1199",

publisher = "Elsevier B.V.",

number = "4",

}

TY - JOUR

T1 - The size of venture capital and private equity fund portfolios

AU - Bernile, Gennaro

AU - Cumming, Douglas

AU - Lyandres, Evgeny

PY - 2007/9

Y1 - 2007/9

N2 - We propose a model that examines the optimal size of venture capital and private equity fund portfolios. The relationship between a VC and entrepreneurs is characterized by double-sided moral hazard, which causes the VC to trade off larger portfolios against lower values of portfolio companies. We analyze the structural relations between the VC's optimal portfolio structure and entrepreneurs' and VC's productivities, their disutilities of effort, the value of a successful project, and the required initial investment in a venture. We also test the model's predictions using a small proprietary dataset collected through a survey targeted to VC and private equity funds worldwide.

AB - We propose a model that examines the optimal size of venture capital and private equity fund portfolios. The relationship between a VC and entrepreneurs is characterized by double-sided moral hazard, which causes the VC to trade off larger portfolios against lower values of portfolio companies. We analyze the structural relations between the VC's optimal portfolio structure and entrepreneurs' and VC's productivities, their disutilities of effort, the value of a successful project, and the required initial investment in a venture. We also test the model's predictions using a small proprietary dataset collected through a survey targeted to VC and private equity funds worldwide.

KW - Fund portfolio

KW - G24

KW - Private equity

KW - Venture capital

UR - http://www.scopus.com/inward/record.url?scp=34548098698&partnerID=8YFLogxK

U2 - 10.1016/j.jcorpfin.2007.04.004

DO - 10.1016/j.jcorpfin.2007.04.004

M3 - ???researchoutput.researchoutputtypes.contributiontojournal.article???

AN - SCOPUS:34548098698

SN - 0929-1199

VL - 13

SP - 564

EP - 590

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

IS - 4

ER -

The size of venture capital and private equity fund portfolios

Abstract

Keywords

Access to Document

Other files and links

Fingerprint

Cite this