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The effect of market structure on specialization decisions in venture capital (2008).
| Content Provider | CiteSeerX |
|---|---|
| Abstract | In making its investment decisions, a venture capital firm must consider whether to be a generalist or a sector specialist. While spreading investments across sectors has benefits – such as diversifying the firm’s holdings and opening up a larger pool of investment opportunities – it reduces the benefits of specialization, namely that a specialist has greater access to its sector’s most promising ventures, either because it can more accurately assess a project’s value or because, in this two-sided market, the venture is more likely to accept an investment from a VC with specialized knowledge of its sector. In addition, competition from other VC firms will affect a firm’s specialization choice in the sense that its relative standing among competitors will influence a startup’s decision to accept its investment. We find empirical evidence suggesting that firms alter their specialization decisions in response to competitors and market structure using a panel dataset of VC investments from 1975- 2003. |
| File Format | |
| Publisher Date | 2008-01-01 |
| Access Restriction | Open |
| Subject Keyword | Specialization Decision Market Structure Venture Capital Firm Holding Panel Dataset Investment Decision Two-sided Market Firm Specialization Choice Relative Standing Specialized Knowledge Vc Firm Empirical Evidence Startup Decision Sector Specialist Promising Venture Venture Capital Firm Vc Investment Investment Opportunity |
| Content Type | Text |
