Skill versus reliability in venture capital

• 成果类型: Article
• 署名作者: Khanna, Naveen; Mathews, Richmond D.
• 署名单位: Michigan State University; Michigan State University's Broad College of Business; University System of Maryland; University of Maryland College Park
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.07.007
• 发表日期: 2022
• 页码: 41-63
• 关键词: venture capital; COMPETITION; skill; reputation

摘要

We study competition for startups among VCs with heterogeneous skill. VCs with established skill face two impediments. First, less established VCs compete aggressively for new startups in order to establish a reputation. Second, startups also value reliability in their VCs, which imposes a higher cost on established VCs because they have better outside options. As a result, startups over-experiment by excessively partnering with less established VCs, which crowds out established skill and reduces social welfare. Established VCs are hurt because they need to pay more to attract startups, lose profitable opportunities, and face increased competition from newly established VCs. (C) 2021 Elsevier B.V. All rights reserved.