Browsing by Subject "Venture capital"
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Item The downside of repeated ties : syndicated capital investments(2007-05) Khanna, Poonam, 1966-; Westphal, James D.Item The downside of repeated ties: syndicated capital investments(2007) Khanna, Poonam; Westphal, James D.Item Emerging models for funding cleantech innovation : the Alberta case study(2015-05) Udwin, Trevor Charles; Rai, Varun; Pierce, SuzanneCleantech is a broad term and requires further definition. The first part of this thesis will paint a landscape of the cleantech industry, which will in turn help define the term. The cleantech industry as it is generally perceived has come on hard times; talk of cleantech is all but absent in the corridors of Silicon Valley and chambers of Congress. Starting in the late 2000s both endogenous and exogenous factors compounded and investment in the industry dropped, as traditional early investors like Venture Capitalists (VC) confronted barriers that were unique to the industry and antithetical to their investment model. Notwithstanding, since the cleantech downturn some VC investors have emerged successful and have sparked new interest in the industry. Possessing the knowhow and skills that will allow them to continue thriving in the space, these VCs will play an important role in the growth of the sector. Other investment models are required to take hold where VCs were unable to succeed, however, providing the influx of capital that is required to incentivize disruptive change in such a large and dynamic industry. Moving forward, the success of the cleantech industry will rely on whether new models for early investment will fill gaps where traditional models have failed. To overcome the investment Valley of Death (there are multiple) cleantech companies need investment models that provide assurance for time sensitive follow-on funding, as they scale their technologies from prototype all the way to commercialization. This thesis will build on prior research highlighting that the investment challenges of yesteryear have shifted traditional investors in the VC community away from cleantech infrastructure and towards IT-like investments. Using the Alberta model as successful sample of an ecosystem of alternative models for funding cleantech innovation, this thesis will provide a better understanding of how investment in cleantech infrastructure can reach necessary funding levels in order to commercialize the myriad of clean energy technologies that promise to help mitigate climate change.Item Essays on financial institutions(2008-08) Shah, Ronnie Rashmi, 1981-; Almazan, Andres; Titman, SheridanIn this dissertation, I explore the ability of financial institutions to impact firm behavior. The first essay examines whether relationships between venture capital owners (VCs) and investment banking underwriters affect a firm’s ability to issue equity. I find that past interactions between VC owners and underwriters in the form of previously underwritten initial public offerings (IPOs) significantly increase the likelihood that an IPO firm chooses a specific underwriter. In terms of how VCs and underwriters associate with each other, older VCs partner with more reputable underwriters. Despite paying higher fees, issuing firms benefit from stronger VC-Underwriter relationships through upward offer price revisions and higher valuations. VC-Underwriter relationships also predict underwriter choice in subsequent equity offerings. This essay provides empirical evidence that suggests VCs use their relationships with investment banks to enable their portfolio firms access to high quality underwriters and better underwriting services. The second essay investigates whether credit rating concerns affect capital investment decisions. Using ex-ante measures of proximity to a rating change, I find that firms that are near a credit rating downgrade spend significantly less on capital expenditures relative to those not near a rating change. The response of firms to credit rating upgrades is not symmetric: firms do not seem to adopt significantly different investment policies when near an upgrade. This effect of lowering investment when near a credit downgrade is stronger for firms that face financial constraints, experience greater adverse selection and are more active in debt markets. Related to reductions in investment, firms near rating changes also spend less on research and development expenses and pay lower dividends. My findings are consistent with firms conserving financial resources to prevent adverse credit rating changes that could increase their cost of capital.Item Three Studies on the Role of Venture Capital Firms in Funded Ventures’ Inter-Firm Collaboration(2011-08) Wang, Xiaodan; Wan, William P.; Lumpkin, Thomas G.; Payne, Gregory Tyge; Short, Jeremy C.; Westfall, Peter H.Despite the beneficial effects of alliances in facilitating survival, growth and performance of entrepreneurial startups, it is in general difficult for entrepreneurial startups to form alliances due to their poor resource endowments and lack of established social networks. Venture capital firms are active investors that support the development of entrepreneurial startups by providing both funding and a variety of non-pecuniary value-added services. In this dissertation, I examine the influence of VC firms on alliance formation by entrepreneurial startups in their investment portfolios (portfolio firms), which is a unique value-added service of VC firms that has been largely ignored in extant literature. In this three-paper dissertation, I posit that VC firms can influence portfolio firms’ alliance formation by providing reliable information about potential alliance opportunities. I investigate, respectively in three papers, the relationship between alliance formation by a portfolio firm and 1) composition of VC syndication, 2) alliance formation by firms in the same VC portfolio, and 3) network positions of VC firms. Specifically, in study one I argue that VC syndications with different compositional characteristics, such as size, experience and heterogeneity, offer different levels of information benefits for portfolio firms with respect to alliance opportunities, which influence the likelihood of alliance formation by portfolio firms. Strength of the relationship between VC firms and their portfolio firms is found to positively moderate the relationship between VC syndication composition and the alliance formation by portfolio firms. In study two, I examine the influence of VC interlocks on alliance formation by portfolio firms, as well as the cross-level moderating effects of tie strength and TMT size. In study three I propose that VC firms’ positions in their syndication networks – network centrality and network constraint – are positively associated with alliance formation by portfolio firms, and such relationship is weaker when the VC firms are corporate subsidiaries. To test the hypotheses of these three papers of the dissertation, I assembled three distinct data sets from multiple archival data sources. Conditional logit regression, longitudinal multilevel logit regression, and logit regression were employed respectively. These studies contribute to the strategy and entrepreneurship literatures in general and the alliance and VC literatures in particular.Item Venture capital and career concerns(2013-08) Crain, Nicholas Geoffrey, 1979-; Parrino, Robert, 1957-; Titman, SheridanThis dissertation examines the effect of career concerns on the pattern of investments selected by venture capital fund managers. I propose a simple model in which managers strategically adjust the variance of their portfolio to maximize the probability of raising a follow-on fund. The model demonstrates that career concerns can encourage venture capital fund managers to inefficiently select investments that are too conservative. The influence of these career incentives declines following good initial fund performance, leading to a positive correlation between early fund performance and late fund risk-taking. Using a unique data set of company-level cash flows from 181 venture capital funds, I demonstrate that the intra-fund patterns of investment in venture capital broadly match the predictions of the model. First, I show that the characteristics of career concerns in the venture capital industry are consistent with the assumptions which drive the model. Funds who perform well in their initial investments raise a new fund more quickly, and the size of their next fund is concave with respect to the existing fund's performance. Second, using a maximum likelihood methodology I show that venture capital fund managers select more risky portfolio companies following good performance and tend to be less diversified.