Contents lists available at ScienceDirect

0
0
18
5 months ago
Preview
Full text
Journal of Business Venturing 25 (2010) 155–172  In this paper, I collect data on the educational and work histories of venture capitalists who start first-time venture capital funds and use this information to test several hypotheses about the relation between venture capital fund management team humancapital and venture capital fund performance. Additionally, because I focus on fund-level performance I am able to examine whether human capital measures which predict the performance of first-time funds also predict whether a follow-on fund is raised,enabling one test of whether human capital differences can explain persistence in venture capital fund performance documented in previous work. 1 See, for example, Cochrane (2005) , Kaplan and Schoar (2005) , Phalippou and Gottschalg (2006) and Hwang, Quigley and Woodward (2005)   Additionally, because I focus on fund-level performance I am able to examine whether human capital measures which predict the performance of first-time funds also predict whether a follow-on fund is raised,enabling one test of whether human capital differences can explain persistence in venture capital fund performance documented in previous work. Because I collect a different set of manager biographicalvariables, I test a different, more nuanced, set of hypotheses about the roles of specific and general human capital types, such as task- and industry-specific human capital, in venture capital fund performance. 2 Two notable exceptions are empirical studies on the role investor human capital plays in predicting investment performance are Chevalier and Ellison (1999) and Golec (1996) in the setting of the mutual fund industry3. Theory and hypotheses  While the definitions of these human capital types are unique to the particularempirical setting of this paper, the hypotheses I test are related to existing theories on the role of types of human capital within the Gibbons and Waldman (1999, 2004)put forth a model in which task-specific human capital is developed and firm. The venture capital markets are particularly well-suited for an investigation of the roles of industry-specific human capital of managers since venture capitalists are active investors who often become involved in the governance and strategic decisions of thecompanies that their firms finance by sitting on the companies’ boards of directors or in helping their companies identify good managers or advisors. 3.3. Secondary hypotheses  I measure the average number of syndicatepartners a venture capital fund has in the rounds in which it first invests in each of its portfolio companies and use this measure as a control variable in the empirical analysis. Thus, we would expect an inverse relation between the amount of competition in the venture capital industry as measured by the amount of venture capital raised by all funds and thelikelihood that a venture capital fund’s companies are exited. 4.1. Sample selection  I focus only on venture capital funds, rather then both venture capital and buyout funds, since the typesof investments these two types of fund make can be very different and thus skill sets that are likely required for fund success will vary between venture capital and buyout funds. I define a first-time fund if it isthe first fund reported as managed by a venture capital firm and has a vintage year of no more than two years after the founding date of the managing venture capital firm. 4.2. Venture capitalist biographical information  If they have, I classify these individuals as fund managers, since serving as a board member andmonitoring and advising portfolio companies is the role of a fund manager; the venture capitalist or fund manager who is the “lead,” or responsible decision maker, for a deal often takes a board seat on the portfolio company. To ensure that the main results in the paper are not driven by survivorship bias, I repeat the regression analysis detailed below on the sub-sample of first-time funds raised in the 1990s, when there are fewer missing first-time funds and find that the main findings are robust to this analysis. 4.3. Summary statistics  Table 2 , weWhen we focus on the fund-level averages across first-time fund management teams in the second column of see that the fractions of fund management teams that have a particular characteristic roughly line up with the fractions ofindividuals venture capitalists with a particular characteristic. Table 3 presents correlation matrices for the individual venture capitalist human capital variables in Panel A and for thevariables measuring the fraction of venture capital fund managers with a particular human capital characteristic in Panel B. 9 The average number of partners is smaller than in several previous studies because I focus on first-time funds, which typically have between 1 and 4 founding  I regress the fraction of portfolio companies in which afund invests that exit, my proxy for fund returns, on fund-level top management team human capital measures detailed in Section 3.2 and other fund-level and market-level controls detailed in Section 3.3 as in Eq. The variables Xk,i are fund-level controls – the number of fund managers, the natural logarithm of the size of the fund (in constant year 2000 millions of dollars), the Herfindahl–Hirschman index of a fund’s portfoliocompanies by industry, the fraction of a fund’s portfolio companies that are early stage investments, and the fraction of a fund’s portfolio companies that are in each of the six VentureXpert industries. 5.1. Fund performance regressions  Thus, the evidence on the impact of more general humancapital on venture capital fund performance is mixed, with only support for the hypothesis that venture capital fund management teams with more general human capital in the form of science and engineering education manage better performing funds (i.e.,Hypothesis 4(a)). In the following subsection, I further explore Hypothesis 3, that measures of industry-specific human capital may matter more for certain types of venture capital fund investments by interacting the fraction of fund managers with industry-specific humancapital in non-venture finance and science and engineering with the fraction of a fund’s portfolio companies that are later stage and high tech, respectively. 5.2. Interacting industry-specific human capital with fund portfolio company composition  I also interact the variable SciEngDegree with the variable FracHighTech to test whether having a degree inscience and engineering has a stronger positive effect on the fraction of portfolio company exits when more of the portfolio companies are in high-tech industries. This indicates that when fund managers have both more general andindustry-specific human capital in science and engineering, their positive influence on fund company exits is more important when more of those investment are in high-tech fields in which such expertise is likely more valuable. 5.3. Fund manager human capital and subsequent fundraising  Discussion and future research The preceding analysis has documented that task-specific human capital, defined as human capital specific to the tasks of ventureinvesting and of managing a start-up company, strongly predict better venture capital fund performance in the form of greater portfolio company exits and the ability to raise a follow-on fund. The statistically significant positive coefficients on the fraction of fund managers who worked previously as venture investors, entrepreneurial managers and as management consultants suggest that the supply of such individuals into the venturecapital industry is restricted or limited in some way or that the ability of individuals entering the venture capital industry to obtain these types of human capital is limited.

RECENT ACTIVITIES

Etiquetas

Documento similar

Algal turfs colonization effect on Pocillopora capitata (Anthozoa: Scleractinia) growth at Mexican tropical Pacific
0
0
7
Suitable habitat availability for mammals at regional (State of Guerrero) and national (Mexico) scales
0
0
12
Recruitment patterns of 4 fish species in spur and patch habitats at Chinchorro Bank reef (Mexican Caribbean)
0
0
10
Inventory of invertebrates from the rocky intertidal shore at Montepío, Veracruz, Mexico
0
0
14
Seasonal assessment of the diet of coyote (Canis latrans) at north of the Mapimí Biosphere Reserve, Mexico
0
0
12
Food and Chemical Toxicology 50 (2012) 4221–4231 Contents lists available at SciVerse ScienceDirect
0
0
11
Trees, Ecophilia, Ecophobia: A Look at Arboriculture along the Front Range Cities of Colorado
0
0
11
Cecilia Medrano -Caviedes, Research associate at Sciences-PoCERI (France) and Guillaume Fontaine, Senior Researcher at FLACSO (Ecuador)
0
0
19
Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at
0
0
7
UNIT 1 : ENERGY AND WORK – Extension Contents
0
0
8
Now look at this picture and check your answers
0
0
7
Contents lists available at ScienceDirect
0
0
11
Embedded software stuck at C
0
0
25
A belt conveyor is rubber or textile structure with a belt shape closed ring, with a vulcanized or metallic joint, used for material transportation. • Belt conveyors are the most used for transport of solid objects and bulk materials at great speed, cover
0
0
19
GrantWatch: Outcomes Cite this article as: http:content.healthaffairs.orgcontent2641186.full.html available at: The online version of this article, along with updated information and services, is
0
0
5
Show more