Management Buy-outs and Venture Capital

Management Buy-outs and Venture Capital

Into the Next Millennium

Edited by Mike Wright and Ken Robbie

This book presents up-to-date evidence on the issues facing financiers and intermediaries involved in venture capital and management buy-outs. It provides a comprehensive review of existing literature and an analysis of international trends in market development as well as a global comparison of the major issues.

Chapter 9: Funds providers' role in venture capital firm monitoring

Mike Wright, Ken Robbie and Brian Chiplin

Subjects: economics and finance, industrial organisation


Page 202 9.  Funds providers’ role in venture capital firm monitoring  Ken Robbie, Mike Wright and Brian Chiplin Introduction The venture capital process can be characterised as involving two sets of key relationships, those between venture capital firms and the entrepreneurs in whom they  invest and those between venture capital firms and their funds providers. As shown in Chapter 1, there is a substantial literature on the relationship between the venture  capital firm and its investees. However, the monitoring relationship between venture capital firms and their funds providers has been relatively neglected. This omission  raises a number of important issues for both academic researchers and practitioners. For academic researchers questions are raised concerning the extent and nature of  the monitoring by funds providers of venture capital firms, the information required and the implications for the performance of the industry. For practitioners,  examination of the operation of funds providers may provide insights into their objectives and information needs and may also be important given indications (see  below) that their approaches may be changing. This chapter examines these issues as follows. The first section briefly reviews previous literature. The second section considers the implications for funds providers of  the current competitive position of the UK venture capital market as reviewed in Chapter 3. The third section describes the data and methodology used and the fourth  section presents the results. The final section presents conclusions and implications of the research. Existing literature Previous literature which helps in formulating expectations about the nature of...

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