Do Venture Capital Firms Benefit from a Presence on Boards of Directors of Mature Public Companies?

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Abstract

This paper examines the benefits to venture capital firms of their officers holding directorships in mature public companies in terms of fundraising and investment performance. Our empirical results show that venture capital firms raise more funds, set higher fund-raising targets, and are more likely to successfully exit their investments post-appointment of their officers to boards of directors of S&P 1500 companies. Directorship status in mature public firms provides venture capital firms with enhanced networks, visibility, and credibility, all of which facilitate their fundraising activities. In addition, the knowledge, expertise, and experience acquired through holding directorships in mature public firms are beneficial for their portfolio companies, as measured by the likelihood of successful exits.

Bibliographical metadata

Original languageEnglish
Pages (from-to)125-140
JournalJournal of Corporate Finance
Volume49
Early online date29 Dec 2017
DOIs
Publication statusPublished - Apr 2018

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