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| Author: | Arping, S. Falconieri, S. |
| Title: | Strategic versus financial investors: the role of strategic objectives in financial contracting |
| Journal: | Oxford Economic Papers
2010 : OCT, VOL. 62:4, p. 691-714 |
| Index terms: | new enterprise entrepreneurship financing contracts venture capital investors theories |
| Language: | eng |
| Abstract: | Strategic investors, e.g. corporate venture capitalists, involve themselves in the financing of start-up firms to complement their core businesses and to ease the internalization of externalities. Herein, it is argued that while strategic objectives make it more worthwhile for an investor to bring about high entrepreneurial effort, they can also undermine his commitment to penalize poorly performing entrepreneurs by terminating their projects. Based on this trade-off, developed is a theory of financing choice btw. strategic and financial investors. This framework offers insights into the design of corporate venturing deals and the choice btw. corporate venturing and independent venture capital finance. |
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