Venture Capital and Private Equity Contracting, 2nd Edition
by Douglas J. Cumming, Sofia A. Johan
Style Drift
This chapter introduces the concept of style drift to private equity investment. We present theory and evidence pertaining to style drifts in terms of a fund manager’s stated focus on particular stages of entrepreneurial development. We present a model that derives conditions under which style drifts are less likely among younger fund managers, in order to signal ability and commitment to stated objectives for the purpose of raising follow-on funds. We also show ways in which changes in market conditions can affect style drifts and show differences for funds committed to early stage investments versus funds committed to late stage investments. The VentureXpert data examined provide strong support for our theoretical predictions as ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access