what do entrepreneurs pay for venture capital affiliation（企业家支付风险资本联系什么）.pdfVIP

THE JOURNAL OF FINANCE • VOL. LIX, NO. 4 • AUGUST 2004 What Do Entrepreneurs Pay for Venture Capital Affiliation? DAVID H. HSU∗ ABSTRACT This study empirically evaluates the certification and value-added roles of reputable venture capitalists (VCs). Using a novel sample of entrepreneurial start-ups with multiple financing offers, I analyze financing offers made by competing VCs at the first professional round of start-up funding, holding characteristics of the start-up fixed. Offers made by VCs with a high reputation are three times more likely to be accepted, and high-reputation VCs acquire start-up equity at a 10–14% discount. The evidence suggests that VCs’ “extra-financial” value may be more distinctive than their functionally equivalent financial capital. These extra-financial services can have financial consequences. A CENTRAL ISSUE for early-stage high-tech entrepreneurs is obtaining external resources when the assets of their start-up are intangible and knowledge-based. Particularly for entrepreneurs without an established reputation, convincing external resource providers such as venture capitalists (VCs) to provide finan- cial capital may be challenging. The literature contains two main lines of re- search for overcoming this problem. One research stream has concentrated on designing institutional structures to permit financing early-stage ventures. This contractual- and monitoring-based approach is aimed at solving poten- tial agency problems between investors and entrepreneurs (e.g., Admati and ¨ Pfleiderer (1994), Lerner (1995), Hellmann (1998), and Kaplan and Stromberg (2001, 2002, 2003)).