Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/268897 
Year of Publication: 
2023
Series/Report no.: 
CFS Working Paper Series No. 695
Publisher: 
Goethe University Frankfurt, Center for Financial Studies (CFS), Frankfurt a. M.
Abstract: 
Venture capital (VC) funds backed by large multi-fund families tend to perform substantially better due to cross-fund cash flows (CFCFs), a liquidity support mechanism provided by matching distributions and capital calls within a VC fund family. The dynamics of this mechanism coincide with the sensitivity of different stage projects owing to market liquidity conditions. We find that the early-stage funds demand relatively more intra-family CFCFs than later-stage funds during liquidity stress periods. We show that the liquidity improvement based on the timing of CFCF allocation reflects how fund families arrange internal liquidity provision and explains a large part of their outperformance.
Subjects: 
Venture capital
Fund family
Subsidization
Liquidity
Performance
JEL: 
G24
G23
G34
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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