Startup cash flows and venture capital investments: a real options approach

Autor: Baran Siyahhan, Donia Trabelsi
Přispěvatelé: Département Droit, Economie et Finances (DEFI), Institut Mines-Télécom [Paris] (IMT)-Télécom Ecole de Management (TEM)-Institut Mines-Télécom Business School (IMT-BS), Institut Mines-Télécom [Paris] (IMT), Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) (LITEM), Université d'Évry-Val-d'Essonne (UEVE)-Université Paris-Saclay-Institut Mines-Télécom Business School (IMT-BS), Institut Mines-Télécom [Paris] (IMT)-Institut Mines-Télécom [Paris] (IMT), Dynamique des réseaux, de l'innovation et de la connaissance (KIND), Institut Mines-Télécom [Paris] (IMT)-Institut Mines-Télécom [Paris] (IMT)-Télécom Ecole de Management (TEM)-Institut Mines-Télécom Business School (IMT-BS), Institut Mines-Télécom [Paris] (IMT)-Département Management, Marketing et Stratégie (MMS), Télécom Ecole de Management (TEM)-Institut Mines-Télécom [Paris] (IMT)-Institut Mines-Télécom Business School (IMT-BS), LITEM-IMO, Département Droit, Economie et Finances (IMT-BS - DEFI), Institut Mines-Télécom [Paris] (IMT)-Télécom Ecole de Management (TEM)-Institut Mines-Télécom [Paris] (IMT)-Institut Mines-Télécom Business School (IMT-BS), Institut Mines-Télécom [Paris] (IMT)-Département Management, Marketing et Stratégie (IMT-BS - MMS)
Jazyk: angličtina
Rok vydání: 2021
Předmět:
Strategy and Management
Agency cost
Management Science and Operations Research
Microeconomics
JEL: C - Mathematical and Quantitative Methods/C.C6 - Mathematical Methods • Programming Models • Mathematical and Simulation Modeling/C.C6.C61 - Optimization Techniques • Programming Models • Dynamic Analysis
Management of Technology and Innovation
0502 economics and business
Sequential investment
Real options
JEL: G - Financial Economics/G.G1 - General Financial Markets/G.G1.G11 - Portfolio Choice • Investment Decisions
050207 economics
Business and International Management
JEL: G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G24 - Investment Banking • Venture Capital • Brokerage • Ratings and Ratings Agencies
Risk aversion
05 social sciences
JEL: D - Microeconomics/D.D8 - Information
Knowledge
and Uncertainty/D.D8.D81 - Criteria for Decision-Making under Risk and Uncertainty
Venture capital
Investment (macroeconomics)
[SHS.ECO]Humanities and Social Sciences/Economics and Finance
Cash flow
Business
Volatility (finance)
Monitoring tool
050203 business & management
Zdroj: Managerial and Decision Economics
Managerial and Decision Economics, Wiley, 2021, 42 (3), pp.737-750. ⟨10.1002/mde.3269⟩
Managerial and Decision Economics, 2021, 42 (3), pp.737-750. ⟨10.1002/mde.3269⟩
ISSN: 0143-6570
1099-1468
DOI: 10.1002/mde.3269⟩
Popis: FNEGE 3, HCERES B, ABS 2; International audience; This paper studies venture capitalists' (VCs') sequential investment decisions in a real options model. We account for VCs' risk aversion, agency costs and VC activism. We identify two separate investment policies: when startups have positive cash flows, more risk averse and more active VCs expedite their investments while higher agency costs delay staged investments. The opposite is true for negative-cash-flow startups. The model predicts a negative relation between risk aversion and stage length in line with the idea that VCs use stage length as a monitoring tool. We also show that higher growth rates and lower volatility encourage earlier investments.
Databáze: OpenAIRE
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