Abstract
This paper provides an empirical analysis of risk handling arrangements adopted in the relationship between the venture capital investor and his investee. The theoretical framework adopted is principal-agent analysis, which views the investee as a risk averse agent entering into a risk sharing contract with the investor, a risk neutral Fully diversified) principal. The sample analysed is made up of twenty venture capital investors in the UK over the period 1992-93, and (where available) their corresponding investee(s). These investors accounted for about three-quarters of venture capital activity in the UK over this period. The paper reports on evidence gathered by semi-structured interviews with investors and investees, on expected returns, portfolio balance, screening and risk sharing.
Original language | English |
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Pages (from-to) | 27-47 |
Number of pages | 21 |
Journal | European Journal of Finance |
Volume | 3 |
Issue number | 1 |
DOIs | |
Publication status | Published - 1997 |
Keywords
- venture capital
- risk management
- risk sharing