Venture Capitalists Dynamic Bayesian's Equity Selling Game During the Initial Public Offering

2002 ◽  
Author(s):  
Ayi Ayayi
Keyword(s):  
Initial Public Offering ◽  
Venture Capitalists ◽  
Public Offering

scholarly journals Exit Decision of Venture Capital Based on Linear Contract in Continuous Time: IPO or M&A

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-19
Author(s):  
Ding Chuan ◽  
Dahai Li ◽  
Meishu Ye
Keyword(s):  
Social Welfare ◽  
Venture Capital ◽  
Interest Rates ◽  
Initial Public Offering ◽  
Continuous Time ◽  
Production Efficiency ◽  
Venture Capitalists ◽  
Social Welfare Maximization ◽  
Incentive Problem ◽  
Public Offering

Based on the assumption that the long-term value of a venture capital satisfies the algebraic Brownian motion, we develop a continuous-time exit model of venture capital under different exit modes, namely, initial public offering (IPO) and mergers and acquisitions (M&A). The employee incentive problem is analyzed jointly with the exit decision of the firm in terms of the exit timing and the exit mode. Further, the problem of capital exit is considered from two perspectives, namely, optimal venture capital and social welfare maximization, and the differences between these exit decisions are compared. Our model predicts that the timing of an IPO, the purpose of which is to maximize the utility of the capitalists, lags behind the exit timing, whose purpose is to maximize social welfare. Using a numerical analysis, this paper also proves that increasing the production efficiency, lowering the interest rates, and improving risk management can make the exit decision of venture capitalists converge with that of maximizing social welfare.

INITIAL PUBLIC OFFERINGS AND PRE-IPO SHAREHOLDERS: ANGELS VERSUS VENTURE CAPITALISTS

2012 ◽  
Vol 17 (04) ◽  
pp. 1250022 ◽  
Author(s):  
WILLIAM C. JOHNSON ◽  
JEFFREY E. SOHL
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Early Stage ◽  
Equity Capital ◽  
Venture Capitalists ◽  
Public Offerings ◽  
Corporate Investors ◽  
Public Offering ◽  
Angel Investors

At the time of an initial public offering, shares in a firm are typically held by venture capitalists, insiders, corporate investors and angel investors. We examine the role of angel investors in the IPO process. We find that angel investors provide equity capital in industries venture capitalists are less likely to serve and that shareholders in angel backed IPO firms are more likely to sell their shares at the time of the offering. Where venture capital backed IPO firms have higher underpricing, angel backed IPO firms do not, implying that angels may be the preferred investors for early-stage firms.

Entrepreneurial Litigation and Venture Capital Finance

2017 ◽  
Vol 52 (5) ◽  
pp. 2217-2250 ◽  
Author(s):  
Douglas Cumming ◽  
Bruce Haslem ◽  
April Knill
Keyword(s):  
Venture Capital ◽  
Initial Public Offering ◽  
Venture Capitalists ◽  
Public Offering

This article empirically examines the interaction between entrepreneurial plaintiff firm litigation and venture capital (VC). The data indicate that, relative to nonplaintiffs, firms that litigate prior to (after) obtaining VC i) receive financing from less (more) reputable venture capitalists (VCs), ii) are subject to greater (similar) oversight by VCs, iii) receive less (more) VC funding, iv) are more likely to exit through an initial public offering than through an acquisition, and v) are less likely to be liquidated when litigation occurs after VC financing. The results are robust to different specifications, methodologies, and endogeneity checks.

scholarly journals The Legal and Institutional Foundations of Silicon Valley’s Technological Innovation: An Interdisciplinary Literature Review

2021 ◽  
Vol 8 (3) ◽  
pp. 472-484
Author(s):  
S. D. Stone
Keyword(s):  
Venture Capital ◽  
Technological Innovation ◽  
Initial Public Offering ◽  
Silicon Valley ◽  
Business Culture ◽  
Venture Capitalists ◽  
Board Of Director ◽  
Institutional Relations ◽  
Major Factors ◽  
Public Offering

This article reviews interdisciplinary literature to explain how state legislation and the practice of law in California influenced the success of Silicon Valley in creating a startup business culture involving the commercialization of technologies built on venture capital finance. Scholarship has identified four major factors in the rise of Silicon Valley: business culture, symbiotic institutional relations with research universities, California contract and employment law, and Silicon Valley law firm culture. Both law and institutional support have been central to the commercialization of scientific knowledge that is the hallmark of Silicon Valley. Silicon Valley companies have remained leaders in technological innovation for over sixty years, encompassing various technologies from semiconductors to personal computers to the Internet. This entrepreneurial approach to technology continues to this day as exemplified by the successful DoorDash and Airbnb IPOs launched in 2020. The paradigmatic Silicon Valley technology company consists of a small group of entrepreneurs building a start-up technology company funded by a venture capital fund. The venture capitalists (VC) maintain hands-on management of the company and receive seats on the board of director and preferred stock rights. If the business plan is successful, the company offers shares to the public through an initial public offering (IPO), or arranges additional funding from another VC fund. This Silicon Valley model is characterized by a tolerance for failure and high labor mobility. Technology company employees have the freedom to leave established companies to start their own ventures.

Uncertainty clouds US IPO ebullience going into 2022

2021 ◽  
Keyword(s):  
United States ◽  
Hong Kong ◽  
Initial Public Offering ◽  
The United States ◽  
Venture Capitalists ◽  
Public Companies ◽  
Content Type ◽  
Chinese Companies ◽  
Public Offering ◽  
Start Ups

Significance The company's initial public offering (IPO) is one of three this week expected to raise upwards of USD500mn each, adding to what is already set to be a record-breaking year for IPOs in the United States despite the withdrawal of Chinese companies under pressure from Beijing and Washington. Impacts Hong Kong will be the main beneficiary of Chinese companies' forced IPO withdrawal from US markets. Venture capitalists' being cash-rich should mean a steady stream of start-ups that will eventually seek to become public companies. Investors will press SPAC sponsors to risk more of their own capital.

scholarly journals New path to profits in biotech: Taking the acquisition exit

1969 ◽  
Vol 13 (2) ◽  
Author(s):  
Nils Behnke ◽  
Norbert Hültenschmidt
Keyword(s):  
Data Analysis ◽  
Initial Public Offering ◽  
Paper Analysis ◽  
Venture Capitalists ◽  
Parallel Trade ◽  
Central Thesis ◽  
Public Offering ◽  
Start Ups ◽  
Deal Making ◽  
Company Analysis

The paper aims to demonstrate that biotech start-ups increasingly are choosing trade sales to large pharma or biotech players to move their drug discoveries into the marketplace. It draws on Bain & Company analysis to show that this can provide higher return on investments than an initial public offering, or IPO, once the traditional exit for entrepreneurs and venture capitalists (VCs), but now far less common, and in a shorter time. It argues that pharma companies, VCs and biotech firms need to adapt their approaches to this shift and identifies new priorities for each of these key actors in the sector. In addition to its central thesis, the reader will take from the paper analysis of historical biotech trade sale and IPO data; analysis of pharma companies' strategies for and results from licensing and acquisition deal making; analysis of VCs' strategies for and results from biotech investments; and analysis of biotech companies' strategies for and results from crystallising the value of drug discoveries. The latter includes the recommendation of a 'parallel trade' approach that seeks maximum flexibility by preparing the company for both IPO and trade sale.

Human Resources in Initial Public Offering Firms: Do Venture Capitalists Make a Difference?

2000 ◽  
Vol 25 (1) ◽  
pp. 77-92 ◽  
Author(s):  
Linda A. Cyr ◽  
Diane E. Johnson ◽  
Theresa M. Welbourne
Keyword(s):  
Human Resources ◽  
Initial Public Offering ◽  
Top Management Team ◽  
Vice President ◽  
Strategic Human Resource Management ◽  
Management Team ◽  
Superior Performance ◽  
Venture Capitalists ◽  
Management Literature ◽  
Public Offering

Venture capitalists’ preference for complete, well-balanced founding teams is well established. In addition, the strategic human resource management literature posits that superior performance might accrue to firms that have a member of the top management team responsible for human resources. In this paper, we test whether or not venture capitalist backing affects the likelihood that initial public offering firms will report having a vice president of human resources. We also examine the combined effect on performance as a result of being venture capital-backed and having a vice president of human resources.

Speed to Initial Public Offering of VC-Backed Companies

2001 ◽  
Vol 25 (3) ◽  
pp. 59-70 ◽  
Author(s):  
Dean A. Shepherd ◽  
Andrew Zacharakis
Keyword(s):  
Initial Public Offering ◽  
High Tech ◽  
Venture Capitalists ◽  
Publicly Traded ◽  
The Real ◽  
Portfolio Company ◽  
Public Offering ◽  
Finance Theory

Venture capitalists realize returns on their investments when their portfolio companies either go public (IPO) or are acquired by a publicly traded company. Finance theory implies that the sooner a particular return can be realized the higher the “real” return to the investor. We use an ecosystem perspective to investigate speed to initial Public Offering. Findings indicate that geography of the portfolio company matters, that non high-tech portfolio companies go public faster than do those in the computer-related sector, and that speed is increased with the recent favorable IPO market but not at the same rate for all regions.

Firm Mortality and Natal Financial Care

2015 ◽  
Vol 50 (1-2) ◽  
pp. 61-88 ◽  
Author(s):  
Utpal Bhattacharya ◽  
Alexander Borisov ◽  
Xiaoyun Yu
Keyword(s):  
Initial Public Offering ◽  
Mortality Rates ◽  
Financial Intermediaries ◽  
Venture Capitalists ◽  
High Quality ◽  
Public Companies ◽  
The Public ◽  
Specific Mortality ◽  
Mortality Table ◽  
Public Offering

AbstractWe construct a mortality table for U.S. public companies during 1985–2006. We find that the age-specific mortality rates of firms initially increase, peaking at age three, and then decrease with age, implying that the first 3 years of public life are critical. Financial intermediaries involved around the “public birth” of a firm (e.g., venture capitalists (VCs) and high-quality underwriters) are associated with lower firm mortality rates, sometimes for up to 7 years after the initial public offering (IPO). VCs reduce mortality rates more through natal financial care than through selection, whereas high-quality underwriters affect firm mortality more through selection.

Sign in / Sign up

Export Citation Format

Share Document