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Strategy & Entrepreneurship
New Insights Into Venture Capitalists' Activity: IPO and Time-to-exit Forecast As Antecedents of Their Post-investment Involvement

Academic Journal

New insights into venture capitalists' activity: IPO and time-to-exit forecast as antecedents of their post-investment involvement

Violetta Gerasymenko and Jonathan Arthurs "Journal of Business Venturing" pages 2014

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Journal Details

Journal of Business Venturing, 2014 Vol. 29 Pages pages 405-420

Keywords
Strategy & Entrepreneurship
Journal Article, Academic Journal

Overview

We examine how VCFs' forecast of an IPO exit affects their breadth of advising and the likelihood
of founder–CEO replacement shortly after they invest in a new venture. Moreover, we examine
how the expected time-to-exit moderates these relationships. Our findings show that the
likelihood of founder–CEO replacement upon receiving venture capital funding is significantly
greater if a VCF perceives this company as a potential IPO as opposed to a trade sale, and this
likelihood increases if the forecasted time-to-exit is short. We also illustrate how the breadth of
advice varies as a function of the forecasted IPO and time-to-exit.

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