- Handbooks in Venture Capital series
Edited by Hans Landström
Chapter 5: The Structure of Venture Capital Funds
5 The structure of venture capital funds Douglas Cumming, Grant Fleming and Armin Schwienbacher Introduction Venture capital funds perform a vital intermediary role in the ﬁnancing of entrepreneurial ﬁrms and the spurning of new technology and knowledge in an economy. These funds can take a variety of diﬀerent organizational and legal forms, including limited partnerships, investment trusts, corporate subsidiaries, ﬁnancial institution subsidiaries and government funds. The variety of forms is reﬂective of the way in which the venture capital market has developed over the last forty years, becoming increasingly institutionalized and internationally active. Academic research has followed these market developments in a quest to analyse and explain how institutional markets emerge, what structures characterize them, and how venture capitalists behave. The research literature on the structure of venture capital funds is still relatively young. And yet the topic is important because the structure of venture capital funds lies at the heart of the way in which the institutional venture capital market works. The institutional market involves professional venture capitalists investing on behalf of their investors in entrepreneurial ﬁrms. The structure of these relationships is a combination of explicit and implicit contracts that regulate and guide how venture capital ﬁnance, skills and expertise is delivered to entrepreneurs. In some cases, venture capitalists are loosely governed by covenants through limited partnerships, and ‘live or die’ by their investment success. In other cases, more formal bureaucratic structures impinge on the delivery of venture capital. Our review of the research on the...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.