Venture capital contracting in theory and practice: : Implications for entrepreneurship research

• Autores: Jens Burchardt, Ulrich Hommel, Dzidziso Samuel Kamuriwo, Carolina Billitteri
• Localización: Entrepreneurship: Theory & Practice, ISSN-e 1540-6520, Vol. 40, Nº. 1, 2016, págs. 25-48
• Idioma: inglés
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• Resumen

  • This article provides a comprehensive theoretical and empirical literature review of venture capital contracts. This outlines the differences between theoretical and practical uses of contract designs; that is, (1) how does the choice of securities give rise to different adverse selection problems in terms of attracting different types of entrepreneurial companies; how does the choice of securities in conjunction with cash flow and control rights provisions affect (2) the effort levels by the entrepreneur and the investor; and (3) ultimately affect entrepreneurial outcomes. This article highlights the major discrepancies between theory and practice and points out potential avenues for further research.