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Communication Dans Un Congrès Année : 2019

Venture capital and sequential investments: a real options approach

Résumé

We present a real options model that analyzes venture capitalists' (VCs') timing of sequential investments and stage length decisions. Our approach complements existing models by accounting for VCs' risk aversion, agency costs and VC activism in the startups. We identify two separate investment policies depending on whether the startup generates positive cash flows: optimal investment triggers decrease (increase) in the level of risk aversion when the startup generates positive (negative) cash flows. Stage length is shorter for both positive- and negative-cash-flow startups when VCs are more risk averse. We show that both agency costs and VC activism influences stage length.
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Dates et versions

hal-02170062 , version 1 (01-07-2019)

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  • HAL Id : hal-02170062 , version 1

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Donia Trabelsi, Baran Siyahhan. Venture capital and sequential investments: a real options approach. 36th International Conference of the French Finance Association (AFFI), Jun 2019, Québec, Canada. ⟨hal-02170062⟩
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