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The Impact of Venture Capital Monitoring

Author(s)
Bernstein, Shai; Giroud, Xavier; Townsend, Richard R.
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Abstract
We show that venture capitalists' (VCs) on-site involvement with their portfolio companies leads to an increase in both innovation and the likelihood of a successful exit. We rule out selection effects by exploiting an exogenous source of variation in VC involvement: the introduction of new airline routes that reduce VCs' travel times to their existing portfolio companies. We confirm the importance of this channel by conducting a large-scale survey of VCs, of whom almost 90% indicate that direct flights increase their interaction with their portfolio companies and management, and help them better understand companies' activities.
Date issued
2015-10
URI
http://hdl.handle.net/1721.1/101187
Department
Sloan School of Management
Journal
The Journal of Finance
Publisher
American Finance Association/Wiley
Citation
BERNSTEIN, SHAI, XAVIER GIROUD, and RICHARD R. TOWNSEND. “The Impact of Venture Capital Monitoring.” The Journal of Finance (October 2015): n/a–n/a.
Version: Author's final manuscript
ISSN
00221082
1540-6261

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