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Competition and Specialization in the VC Market: A Non-monotonic Relationship.
- Source :
- Review of Industrial Organization; May2023, Vol. 62 Issue 3, p241-269, 29p, 1 Diagram, 5 Charts
- Publication Year :
- 2023
-
Abstract
- We investigate the relationship between competition and stage specialization in the venture capital (VC) markets. A typical successful entrepreneurial company goes through multiple stages of VC investments; but an average VC firm specializes and participates only in a subset of these stages. We hypothesize that a VC firm's decision to stage-specialize (or not) poses a trade-off between business expansion and competition mitigation. Both effects are influenced by the intensity of competition. Consistent with a prediction of the theoretical model, we find robust empirical evidence for a non-monotonic relationship—an inverted-U shape—between competition and stage specialization in the U.S VC markets between 1980 and 2012. This result is novel and can have interesting managerial and policy implications. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 0889938X
- Volume :
- 62
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- Review of Industrial Organization
- Publication Type :
- Academic Journal
- Accession number :
- 163414792
- Full Text :
- https://doi.org/10.1007/s11151-023-09898-x