Relational venture capital financing of serial founders
(2013) In Journal of Financial Intermediation 22(3). p.308-334- Abstract
- I study how often and why a serial founder receives financing for his new company from a venture capital (VC) firm that also invested in his previous company. One in 10 VC investments leads to a repeated relationship and one in three serial founders enters into a repeated relationship with any previous VC firm. A repeated relationship is more likely when the relational VC firm has acquired more private information about the founder, but less likely if the founder's new venture has a bad fit with the VC firm's geographic or industry focus. My findings add to the literature on relational financing by showing that the preservation of information is an important motivation for relational financing when screening and monitoring costs are high.... (More)
- I study how often and why a serial founder receives financing for his new company from a venture capital (VC) firm that also invested in his previous company. One in 10 VC investments leads to a repeated relationship and one in three serial founders enters into a repeated relationship with any previous VC firm. A repeated relationship is more likely when the relational VC firm has acquired more private information about the founder, but less likely if the founder's new venture has a bad fit with the VC firm's geographic or industry focus. My findings add to the literature on relational financing by showing that the preservation of information is an important motivation for relational financing when screening and monitoring costs are high. Yet, repeated relationships are discontinued because investors also respond to information problems by specializing in certain types of firms. Finally, I find evidence of non-relational investments being passed onto trusted VC syndication partners. (c) 2013 Elsevier Inc. All rights reserved. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/3980126
- author
- Bengtsson, Ola LU
- organization
- publishing date
- 2013
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Venture capital, Entrepreneurship, Relational lending
- in
- Journal of Financial Intermediation
- volume
- 22
- issue
- 3
- pages
- 308 - 334
- publisher
- Elsevier
- external identifiers
-
- wos:000320348400002
- scopus:84881372931
- ISSN
- 1096-0473
- DOI
- 10.1016/j.jfi.2013.04.002
- language
- English
- LU publication?
- yes
- id
- 44bdb007-727a-4f3b-8190-12032ef22981 (old id 3980126)
- date added to LUP
- 2016-04-01 10:11:17
- date last changed
- 2022-04-12 02:50:43
@article{44bdb007-727a-4f3b-8190-12032ef22981,
abstract = {{I study how often and why a serial founder receives financing for his new company from a venture capital (VC) firm that also invested in his previous company. One in 10 VC investments leads to a repeated relationship and one in three serial founders enters into a repeated relationship with any previous VC firm. A repeated relationship is more likely when the relational VC firm has acquired more private information about the founder, but less likely if the founder's new venture has a bad fit with the VC firm's geographic or industry focus. My findings add to the literature on relational financing by showing that the preservation of information is an important motivation for relational financing when screening and monitoring costs are high. Yet, repeated relationships are discontinued because investors also respond to information problems by specializing in certain types of firms. Finally, I find evidence of non-relational investments being passed onto trusted VC syndication partners. (c) 2013 Elsevier Inc. All rights reserved.}},
author = {{Bengtsson, Ola}},
issn = {{1096-0473}},
keywords = {{Venture capital; Entrepreneurship; Relational lending}},
language = {{eng}},
number = {{3}},
pages = {{308--334}},
publisher = {{Elsevier}},
series = {{Journal of Financial Intermediation}},
title = {{Relational venture capital financing of serial founders}},
url = {{http://dx.doi.org/10.1016/j.jfi.2013.04.002}},
doi = {{10.1016/j.jfi.2013.04.002}},
volume = {{22}},
year = {{2013}},
}