Strategic Concessions and the Failure Time of VC-Backed Firms” with Hyung Joon Kim (University of Utah) and Chris Yung (University of Virginia)

Abstract:

Venture capitalists contribute skill and effort as well as continuously monitoring firms in which they invest.  Strategic concessions between the VC and entrepreneur are sometimes necessary to prevent premature liquidation, which occurs if either party abandons the project.  These strategic concessions take different intertemporal forms, depending upon the stochastic evolution of firm quality and the market power of the VC.