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Venture Capital and Private Equity Contracting, 2nd Edition by Sofia A. Johan, Douglas J. Cumming

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20

Investment Duration

This chapter examines cross-country evidence on the duration of venture capital (VC) investment. We formulate a theory of VC investment duration based on the idea that venture capitalists exit when the expected marginal cost of maintaining the investment is greater than the expected marginal benefit, and thereby relate VC investment duration to entrepreneurial firm characteristics, investor characteristics, deal characteristics, and institutional and market conditions. VC investment duration data in Canada and the United States lend strong support to the theoretical predictions developed herein.

Keywords

Venture capital; duration; exits; initial public offerings; write-offs; public policy

20.1 Introduction

Venture capital (VCs) ...

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