Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75620
Year of Publication: 
2000
Series/Report no.: 
CESifo Working Paper No. 381
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
A venture capitalist faces a trade-off between the extent of managerial advice allocated to each start-up and the total number of firms advised. Diminishing returns to advice per firm call for a larger portfolio. As advice gets diluted, further expansion of the portfolio eventually becomes unprofitable.
Subjects: 
Venture capital finance
double-sided moral hazard
company portfolio
Document Type: 
Working Paper
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