The Optimal Portfolio of Start-Up Firms in Venture Capital Finance

By V. Kanniainen, C. Keuschnigg. Social Science Research Network, 2000

292 citations recorded by the source corpus.

A venture capitalist faces a trade-off between the extent of managerial advice allocated to each start-up and the total number of firms advised. Diminishing returns to advice per firm call for a larger portfolio. As advice gets diluted, further expansion of the portfolio eventually becomes unprofitable.

Subfields: Accounting, Management of Technology and Innovation

View Paper: https://www.semanticscholar.org/paper/debf01aaa76cecde55a15d5748d5bbf127d9771f

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In Management of Technology and Innovation

Citations in the corpus

Size and Focus of a Venture Capitalist's Portfolio (2009, methodology): “Differently from Kanniainen and Keuschnigg (2003) and Bernile and Lyandres (2003) we derive the optimal size of a VC’s portfolio by analyzing the combined impact of portfolio size and focus on incentives.”
Private Equity, Leveraged Buyouts and Governance (2007, unknown): “2 see Kaplan (1989) and Jensen (1993).”
Agency, Strategic Entrepreneurship, and the Performance of Private Equity–Backed Buyouts (2009, unknown): “Kanniainen and Keuschnigg (2003) point to an important trade-off between the number of firms in the portfolio of a private equity firm and the extent of managerial advice offered to these portfolio companies.”
Innovation And Venture Capital Exits (2004, unknown): “Kanniainen and Keuschnigg (2003) discuss the trade-o¤venture capitalists face between value-adding and portfolio size.”
Governmental and independent venture capital investments in Europe: a firm-level performance analysis (2017, background): “…when bargaining with banks and other 3 perform coaching (Sahlman, 1990; Groh et al., 2010) and monitoring activities (Gompers, 1995; Lerner, 1995; Kanniainen and Keuschnigg, 2003, 2004; Wang and Zhou, 2004; Giot and Schwienbacher, 2007; Hege et al., 2009; Cressy et al., 2007; Dihiya and Ray,…”
Determinants of Cross-Border Venture Capital Investments in Emerging and Developed Economies: The Effects of Relational and Institutional Trust (2015, unknown): “…due-diligence, as well as the post-deal monitoring and value-adding phase of a venture investment (Cumming and Dai 2010; Davila et al. 2003; Engel and Keilbach 2007; Jääskeläinen et al. 2006; Kanniainen and Keuschnigg 2003, 2004; Mäkelä and Maula 2008; Sapienza 1992; Sapienza et al. 1996).”