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Venture Capital Contracting and the Valuation of High Technology Firms
Edited by Joseph McCahery and Luc Renneboog
536 pages
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numerous tables & figures
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234x156mm
978-0-19-927013-2
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Hardback
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08 January 2004
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- This insightful book bridges the gap between practice and theory in the field of venture capital.
- Provides a comprehensive picture of the structure of venture capital financing, the valuation of investments, and the exit routes for venture capitalists, and explores the differences between the US and European venture capital markets.
- Contains papers by some of the most important researchers in the field.
Venture capitalists are specialized intermediaries that channel capital to firms and professional services to companies that might otherwise be excluded from the corporate debt market and other sources of private finance. Venture capital financing is used to invest mainly in small and medium size firms with good growth and exit potential. Typically, venture capital firms concentrate in industries with a great deal of uncertainty, where the information gaps among entrepreneurs and venture capitalist are commonplace. Venture capital firms are active in sectors with a high informational opacity and agency costs. These ventures are identified as
financially constrained. Start-up firms rely on venture capital as one of their main sources of funding. Recent empirical research has found that the effect of venture capital on the success of these ventures is considerable. The value of venture capital investment is borne out by the figures which show that venture capital backed-firms grow on average twice as fast as those not backed by venture capital firms.
The debate on the development of an efficient venture capital market has forced us to consider which financial instruments, legal rules, labour laws, contracts, and other institutional structures are necessary to create a venture capital market. The contributions to this book have offered insights on the structure of venture capital fund financial contracts,
the screening, monitoring and staging of potential investments, the importance of partnership and other legal business forms for investors and start-up firms, the funding of innovation, the valuation of investments, and the exit routes for venture capitalists. The essays in this volume, which draw upon international evidence and ideas from financial economics and law, contribute to further research on the relationship between venture capitalists and entrepreneurs.
This collection analyses the main legal and contracting structures in the venture capital cycle. Exploring the differences between the US and European venture capital markets, it focuses on diverse organizational and contractual techniques, such as staged finance, convertible securities, board functions and
other forms of control, and the role of exit. Theoretical chapters examine the valuation of entrepreneurial firms and the liquidiation preference in convertible securities. Finally, the book assesses the importance of the IPO market for entrepreneurs, investors and venture capitalists alike.Readership: Academics teaching and researching financial economics, venture capital, entrepreneurship, industrial organization, and corporate law.
Professionals in venture capital and business law.
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Edited by Joseph McCahery, Professor of International Business Law, Tilburg University, and Luc Renneboog, Associate Professor of Finance, Tilburg University Contributors:
Joseph A. McCahery
Luc Renneboog
Bernard S. Black
Ronald J. Gilson
Thomas Hellman
Steven N. Kaplan
Per Strömberg
Dirk Bergemann
Ulrich Hege
William W. Bratton
John Armour
Erik P. M. Vermeulen
Samuel Kortum
Josh Lerner
Han T. J. Smit
Lenos Trigeorgis
John R. M. Hand
Enrico
Perotti
Silvia Rossetto
Michael Cooper
O. Raghavendra Rau
Didier Cossin
Benoît Leleux
Entela Saliasi
Douglas J. Cumming
Jeffrey G. MacIntosh
Edward B. Rock
Susanne Espenlaub
Marc Goergen
Arif Khurshed
Raghuram Rajan
Henri Servaes
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"This insightful and well-documented book bridges the gap between practice and theory in the field of venture capital. These innovative essays will enrich our understanding of the venture capital process." - Prof. Arnoud Boot, University of Amsterdam
"Venture Capital Contracting and the Valuation of High Technology Firms is a timely and up-to-date account of the most important issues facing venture capitalists, entrepreneurs, and investors. The book contains thoughtful and informative essays by several of the leading scholars in the field, and provides a comprehensive picture of the structure of venture capital financing, the valuation of investments, and the exit routes for venture capitalists. Highly recommended for students and practitioners alike." - Prof. G. Mitu Gulati, Georgetown University Law School
"Over the past decade, venture capital finance has developed into an important source of start-up and growth financing. Some of the greatest authorities in venture capial and valuation have gathered to discuss the venture capital process from entrepreneurial start-up to initial public offering. This volume is fascinating reading and highly informative, I highly recommend it." - Prof. Julian Franks, London Business School
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1: Joseph A. McCahery and Luc Renneboog: Venture Capital Financing of Innovative Firms: An Introduction
Part I: Venture Capital Financing
2: Bernard S. Black and Ronald J. Gilson: Venture Capital and the Structure of Financial Markets: Banks Versus Stock Markets
3: Thomas Hellman: Going Public and the Option Value of Convertible Securities in Venture Capital
4: Steven N. Kaplan and Per Strömberg: Evidence on the Venture Capital Investment Process: Contracting, Screening, and Monitoring
5: Dirk Bergemann and Ulrich Hege: The Value of Benchmarking
6: William W. Bratton: Venture Capital on the Downside: Preferred Stock and Corporate Control
Part II: Innovation, Law, and Finance
7: John Armour: Law, Innovation, and Finance
8: Joseph A. McCahery and Erik P. M. Vermeulen: Business Organization Law and Venture Capital
9: Samuel Kortum and Josh Lerner: Venture Captial and Innovation: Clues to a Puzzle
Part III: Valuation of High-Tech Firms
10: Han T. J. Smit and Lenos Trigeorgis: Real Options: Principles of Valuation and Strategy
11: John R. M. Hand: The Market Valuation of Biotechnology Firms and Biotechnology R&D
12: Enrico Perotti and Silvia Rossetto: Internet Portals as Portfolios of Entry
13: Michael Cooper and O. Raghavendra Rau: The Dotcom Premium: Rational Valuation or Irrational Exuberance?
14: Didier Cossin, Benoît Leleux, and Entela Saliasi: The Liquidation Preference in Venture Capital Investment Contracts: A Real Options Approach
Part IV: Venture Capital Exits and IPOs
15: Douglas J. Cumming and Jeffrey G. MacIntosh: The Extent of Venture Capital Exits: Evidence from Canada and the United States
16: Edward B. Rock: Greenhorns, Yankees, and Cosmopolitans: Venture Capital, IPOs, Foreign Firms, and US Markets
17: Susanne Espenlaub, Marc Goergen, Arif Khurshed, and Luc Renneboog: Lock-in Agreements in Venture Capital Backed UK IPOs
18: Raghuram Rajan and Henri Servaes: The Effect of Market Conditions on Initial Public Offerings
19: Marc Goergen, Arif Khurshed, Joseph A. McCahery, and Luc Renneboog: The Rise and Fall of the European New Markets: On the Short and Long-run Preformance of High-Tech Initial Public Offerings
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The specification in this catalogue, including without limitation price, format, extent, number of illustrations, and month of publication, was as accurate as possible at the time the catalogue was compiled. Occasionally, due to the nature of some contractual restrictions, we are unable to ship a specific product to a particular territory. Jacket images are provisional and liable to change before publication.
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