Contracts and Exits in Venture Capital Finance

Douglas J. Cumming

Research output: Working paperResearch

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Contracts and exits from a sample of 179 investment rounds in 132 entrepreneurial firms by 17 European venture capital (VC) funds are analyzed. The data indicate the financial contracts are quite heterogeneous in terms of both the cash flow and control rights. The use of different securities by European VC funds does not depend on the definition of venture capital, and the securities used are not functional equivalents. A normative empirical analysis of exit shows the likelihood of different types of exit vehicles (IPO, acquisition, and liquidation) and the returns to venture capital depend on not only firm specific characteristics but also the allocation of cash flow and control rights.
Original languageEnglish
Place of PublicationKøbenhavn
PublisherLEFIC. Center for Law, Economics and Financial Institutions
Number of pages49
Publication statusPublished - 2002
Externally publishedYes
SeriesLEFIC Working Paper

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