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Essays in venture capital.

Record Type:	Language materials, manuscript : Monograph/item
Title/Author:	Essays in venture capital./
Author:	Kamath, Radhakrishna.
Description:	1 online resource (93 pages)
Notes:	Source: Dissertations Abstracts International, Volume: 72-10, Section: A.
Contained By:	Dissertations Abstracts International72-10A.
Subject:	Finance. -
Online resource:	click for full text (PQDT)
ISBN:	9781124515724

Essays in venture capital.
Kamath, Radhakrishna.

Essays in venture capital. - 1 online resource (93 pages)

Source: Dissertations Abstracts International, Volume: 72-10, Section: A.

Thesis (Ph.D.)--University of Pennsylvania, 2010.

Includes bibliographical references

This dissertation contains two essays on venture capital. In essay 1, we investigate the claim by venture capitalists that they add value to their portfolio companies through their extensive networks. This essay documents a rent-seeking behavior that accompanies this VC keiretsu effect. Using a sample of 570 mergers between venture-backed companies, we find that deals in which the acquirer and target are backed by a common venture investor are followed by substantially worse stock returns and operating performance for the acquirer, after we control for deal characteristics. Moreover, venture-backed acquirers pay higher multiples for targets backed by a common VC. Finally, stock (as the method of payment) is chosen more often in mergers of companies backed by a common VC. Our results suggest that while VCs facilitate the matching of merging firms by reducing information asymmetry, they also use their influence to extract rents from acquirer shareholders. In essay 2, I explore the role of lead investors and proximity to investments in venture capital. I find that the initial investments of more experienced and better networked lead vcs do better. I collect vc branch office information to calculate the distance between the venture investor and the portfolio company. I construct and test various hypotheses pertaining to the processing of soft and hard information by venture investors. I find that that early stage, IT investments, and standalone investments are located closer vis-a-vis later-stage, biotech, and syndicated investments respectively. Most importantly, proximity to the investing syndicate impacts the outcome of investments. I also analyze syndication patterns between lead vcs and syndicate partners. I find evidence that experienced biotech investors cluster together in early rounds for superior project selection. I do not find a corresponding result in the IT industry, suggesting that there are important differences in information acquisition across industries.

Electronic reproduction.
Ann Arbor, Mich. :
ProQuest,
2024

Mode of access: World Wide Web

ISBN: 9781124515724Subjects--Topical Terms:

559073
Finance.
Subjects--Index Terms:

Proximity to investmentsIndex Terms--Genre/Form:

554714
Electronic books.

Essays in venture capital.
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520 $a This dissertation contains two essays on venture capital. In essay 1, we investigate the claim by venture capitalists that they add value to their portfolio companies through their extensive networks. This essay documents a rent-seeking behavior that accompanies this VC keiretsu effect. Using a sample of 570 mergers between venture-backed companies, we find that deals in which the acquirer and target are backed by a common venture investor are followed by substantially worse stock returns and operating performance for the acquirer, after we control for deal characteristics. Moreover, venture-backed acquirers pay higher multiples for targets backed by a common VC. Finally, stock (as the method of payment) is chosen more often in mergers of companies backed by a common VC. Our results suggest that while VCs facilitate the matching of merging firms by reducing information asymmetry, they also use their influence to extract rents from acquirer shareholders. In essay 2, I explore the role of lead investors and proximity to investments in venture capital. I find that the initial investments of more experienced and better networked lead vcs do better. I collect vc branch office information to calculate the distance between the venture investor and the portfolio company. I construct and test various hypotheses pertaining to the processing of soft and hard information by venture investors. I find that that early stage, IT investments, and standalone investments are located closer vis-a-vis later-stage, biotech, and syndicated investments respectively. Most importantly, proximity to the investing syndicate impacts the outcome of investments. I also analyze syndication patterns between lead vcs and syndicate partners. I find evidence that experienced biotech investors cluster together in early rounds for superior project selection. I do not find a corresponding result in the IT industry, suggesting that there are important differences in information acquisition across industries.
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