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J. Lerner, Felda Hardymon, A. Leamon (2012)
Venture Capital & Private Equity: A Casebook (5th Edition)
Information for Subscribers Journal of Applied Corporate Finance is published in four issues per year. Institutional subscription prices for 2012 are: Print & Online: US$484 (US)
(2009)
New Venture Creation: Entrepreneurship for the 21 st Century
S. Kaplan, P. Strömberg (2000)
Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital ContractsCorporate Finance: Capital Structure & Payout Policies
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Ola Bengtsson (2009)
Restrictive Covenants in Venture Capital ContractsERPN: Governance & Organization (Sub-Topic)
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W. Sahlman, Dan Scherlis (1987)
A Method For Valuing High-Risk, Long-Term Investments: The "Venture Capital Method"
S. Edition, Andrew Metrick, A. Yasuda (2010)
VENTURE CAPITAL & THE FINANCE OF INNOVATION SECOND
S. Titman, John Martin (2007)
Valuation: The Art and Science of Corporate Investment Decisions
V. Anshuman, John Martin, S. Titman (2011)
Accounting for Sovereign Risk When Investing in Emerging MarketsMicroeconomics: Intertemporal Firm Choice & Growth
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Kaplan Kaplan, Stromberg Stromberg (2003)
Financial contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital ContractsReview of Economic Studies, 70
Entrepreneurs who deal with a venture capital firm (VC) for the first time often find themselves unprepared for the experience. The deal structure language used to describe financing terms, and the methods used to value the investment, are unique to the VC world. The authors have two objectives in preparing this entrepreneur's guide to venture capital finance: First, they explain why VCs require rates of return that are considerably higher—even after adjusting for difference in risk—than the returns required by the shareholders of established companies. Their explanation focuses on differences of opinion between overly optimistic entrepreneurs and less sanguine VCs. Second, the authors discuss the difficulty faced by entrepreneurs when trying to understand the actual cost of VC financing (including the dilution of value that occurs when entrepreneurs fail to meet targets or milestones). The problem can be traced to deal structure terms that typically call for the VC to receive preferential treatment in the event the entrepreneur's scenario does not turn out to be accurate. More specifically, entrepreneurs often grant VCs control rights as well as liquidation rights that, when things go wrong, dramatically increase the effective cost to entrepreneurs of venture financing.
Journal of Applied Corporate Finance – Wiley
Published: Sep 1, 2012
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