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CFS Working Paper Series, Universität Frankfurt a. M. >
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http://hdl.handle.net/10419/25406
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| Title: | | Screening and advising by a venture capitalist with a time constraint  |
| Authors: | | Dietz, Martin D. |
| Issue Date: | | 2003 |
| Series/Report no.: | | CFS Working Paper 2003/48 |
| Abstract: | | This paper proposes an intertemporal model of venture capital investment with screening and advising where the venture capitalists time endowment is the scarce input factor. Screening improves the selection of firms receiving finance, advising allows firms to develop a marketable product, both have a variable intensity. In our setup, optimal linear contracts solves the moral hazard problem. Screening however asks for an entrepreneur wage and does not allow for upfront payments which would cause severe adverse selection. Project characteristics have implications for screening and advising intensity and the distribution of profits. Finally, we develop a formal version of the venture capital cycle by extending the basic setup to a simple model of venture capital supply and demand. |
| Subjects: | | Venture capital market structure product development |
| JEL: | | D82 G24 L19 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CFS Working Paper Series, Universität Frankfurt a. M.
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