scholarly journals The Optimal Multistage Effort and Contract of VC’s Joint Investment

2015 ◽  
Vol 2015 ◽  
pp. 1-14
Author(s):  
Meng Wu
Keyword(s):  
Capital Investment ◽  
Stackelberg Game ◽  
Decision Making Process ◽  
Game Model ◽  
Venture Capitalists ◽  
Optimal Contract ◽  
Venture Capital Investment ◽  
Ex Post ◽  
Ex Ante

If the venture project has a great demand of investment, venture entrepreneurs will seek multiple venture capitalists to ensure necessary funding. This paper discusses the decision-making process in the case that multiple venture capitalists invest in a single project. From the beginning of the project till the withdrawal of the investment, the efforts of both parties are long term and dynamic. We consider the Stackelberg game model for venture capital investment in multiple periods. Given the optimal efforts by the entrepreneurs, our results clearly show that as time goes, in every single period entrepreneurs will expect their share of revenue paid to shrink. In other words, they expect a higher ex ante payment and a lower ex post payment. But, in contrast, venture capitalists are expecting exactly the opposite. With a further analysis, we also design an optimal contract in multiple periods. Last but not the least, several issues to be further investigated are proposed as well.

scholarly journals Governance of the venture capital investment: Factors influencing selection of an IT firm

2016 ◽  
Vol 6 (2) ◽  
pp. 52-57
Author(s):  
Shailendra Kumar ◽  
Amar Johri
Keyword(s):  
Venture Capital ◽  
Capital Investment ◽  
Decision Making Process ◽  
Venture Capitalists ◽  
Venture Capital Investment ◽  
Qualitative And Quantitative ◽  
Fund Managers ◽  
Bank Managers ◽  
The Relationship ◽  
Selection Of

The selection of a firm for venture capital investment is not an easy task for any investor and so it is important to decide certain factors based on which a firm will be selected for the investment. This paper is based on the 104 responses generated through fund managers, venture capitalists, managers of financial institutions, bank managers etc. and examined two important aspects, first the factors used by venture capitalists to evaluate an IT in order to make investment decisions and second the importance of factors across different investors. This study was conducted in 2014 to find out the important aspects affecting decision making process while selecting an Information Technology firm. We have analyzed the qualitative and quantitative aspects suggested by the previous studies and studied the relationship between choice of factors among different investors and assigning weightage for them with respect to screening of an IT firm for investment.

Legal Environment and Contractual Choice

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Ho Cheung Cheng
Keyword(s):  
Optimal Contract ◽  
Legal Environment ◽  
Gains From Trade ◽  
Legal Systems ◽  
Ex Post ◽  
Ex Ante ◽  
Contractual Choice

Abstract This paper considers contractual choice under imperfect legal systems, in particular, contracts with different timing of payment. Ex-ante payment contracts are risky for the buyer, because the seller may shirk. Ex-post payment contracts are risky for the seller, as the buyer may default. Optimal contract is solved for any given legal environment. Exchanges with lower gains from trade tend to adopt ex-post payment contracts. The seller is a better proposer than the buyer in terms of the efficiency of the proposed contract. Surprisingly, offering ex-ante payment contracts is not strictly better for the seller under any legal environment. Moreover, mixed payment contracts are also analyzed and shown to never be optimal.

scholarly journals How should we regulate artificial intelligence?

2018 ◽  
Vol 376 (2128) ◽  
pp. 20170360 ◽  
Author(s):  
Chris Reed
Keyword(s):  
Artificial Intelligence ◽  
Neural Networks ◽  
Decision Making ◽  
Current System ◽  
General System ◽  
Fundamental Rights ◽  
Ex Post ◽  
Ex Ante ◽  
Human Decision

Using artificial intelligence (AI) technology to replace human decision-making will inevitably create new risks whose consequences are unforeseeable. This naturally leads to calls for regulation, but I argue that it is too early to attempt a general system of AI regulation. Instead, we should work incrementally within the existing legal and regulatory schemes which allocate responsibility, and therefore liability, to persons. Where AI clearly creates risks which current law and regulation cannot deal with adequately, then new regulation will be needed. But in most cases, the current system can work effectively if the producers of AI technology can provide sufficient transparency in explaining how AI decisions are made. Transparency ex post can often be achieved through retrospective analysis of the technology's operations, and will be sufficient if the main goal is to compensate victims of incorrect decisions. Ex ante transparency is more challenging, and can limit the use of some AI technologies such as neural networks. It should only be demanded by regulation where the AI presents risks to fundamental rights, or where society needs reassuring that the technology can safely be used. Masterly inactivity in regulation is likely to achieve a better long-term solution than a rush to regulate in ignorance. This article is part of a discussion meeting issue ‘The growing ubiquity of algorithms in society: implications, impacts and innovations'.

scholarly journals Impact of Venture Capital Investment Syndication on Enterprise Lifecycle and Success

2016 ◽  
Vol 8 (5) ◽  
pp. 75 ◽  
Author(s):  
Asif Siddiqui ◽  
Dora Marinova ◽  
Amzad Hossain
Keyword(s):  
Venture Capital ◽  
Capital Investment ◽  
Survival Duration ◽  
Venture Capitalists ◽  
Venture Capital Investment ◽  
Investment Theory ◽  
Capital Financing ◽  
History Of ◽  
Investment Growth ◽  
The Impact

The article investigates the impact of venture capital investment and investment syndication on enterprise lifecycle and success using the exit history of venture capital backed companies in Australia. It is observed that the venture capital backed companies tend to outperform those which are not while companies receiving syndicated venture capital investment tend to outperform the other venture capital backed companies. Based on the classic venture capital investment theory, we argue that venture capitalists essentially engage in superior venture selection through pre-investment screening and contribute to entrepreneurial development through post-investment monitoring and value creation. We then empirically investigate the lifecycle of the Australian venture capital backed companies from company formation to first venture capital financing round to exit. Survival duration of the ventures, investment growth and exit status are specifically analysed to capture the lifecycle. The findings show that the survival duration prior and post venture capital investment, venture capital investment growth in successive rounds and investment syndication increase the probably of success for the ventures.

scholarly journals THE EFFECT OF REVENUE AND MARKET SEGMENTATION LEVEL TOWARDS VENTURE CAPITAL INVESTMENT IN MOBILE APPLICATION BUSINESS

2014 ◽  
Vol 8 (1) ◽  
pp. 10 ◽  
Author(s):  
Dennis Adrian ◽  
Riswan Efendi Tarigan
Keyword(s):  
Venture Capital ◽  
Market Segmentation ◽  
Mobile Applications ◽  
Mobile Application ◽  
Capital Investment ◽  
Investment Decisions ◽  
Venture Capital Investment ◽  
Potential Market ◽  
Lack Of Knowledge

The development of mobile applications has mushroomed in local and foreign industries. This provides a tremendous opportunity for developers. For technopreneur developer, the capital to run the business is one of the biggest problems despite the fact that they may have great competence in the field. The fact that the business has big potential market in Indonesia has invited investors from local and overseas to invest as venture capital. However, due to the lack of knowledge on building collaboration with the investors and on understanding the market and investor needs in a long term, the developer finds difficulties to grow its business and to compete with bigger competitors. The research intends to seek the influence in selecting the level of revenue and market segmentation to support the investment decisions in the business of mobile applications, so that the mobile application developer is able to monetize their business to attract investors to invest in the venture capital.

scholarly journals Applicability of Z-score Models on the Agricultural Companies in the Republic of Srpska (Bosnia and Herzegovina)

2018 ◽  
Vol 18 (4) ◽  
pp. 227
Author(s):  
Tamara Stojanović ◽  
Ljiljana Drinić
Keyword(s):  
Safe Zone ◽  
Z Score ◽  
Financial Variables ◽  
Financial Difficulties ◽  
Ex Post ◽  
Ex Ante ◽  
The Republic ◽  
Near Future ◽  
Ex Post Analysis

The aim of our research was to test the predictability of Altman’s Z-score models in the case of agricultural companies in the Republic of Srpska. Due to the fact that according to these models the companies from the critical zone are supposed to go bankrupt in the near future, while the companies from the safe zone are not supposed to go bankrupt, these two groups of companies have been subject to ex-ante analysis during the period of five years (2011-2015) in order to estimate the predicting efficiency of Z-score models. The authors have also performed the ex-post analysis to see how the bankrupt companies had been classified according to these models in the years preceding their bankruptcy. The results of these analyses show that Z-score models are not reliable in predicting bankruptcy, nor for the creditworthiness analysis, but can be useful in identifying agricultural companies with long-term financial difficulties especially if other, non-financial variables are included.

scholarly journals Platform capitalism: The intermediation and capitalization of digital economic circulation

2017 ◽  
Vol 3 (1) ◽  
pp. 11-31 ◽  
Author(s):  
Paul Langley ◽  
Andrew Leyshon
Keyword(s):  
Capital Investment ◽  
Network Effects ◽  
Sharing Economy ◽  
Distinct Mode ◽  
Venture Capital Investment ◽  
Ex Post ◽  
Online Marketplaces ◽  
Economic Culture ◽  
Geographically Distributed ◽  
Monopoly Rents

A new form of digital economic circulation has emerged, wherein ideas, knowledge, labour and use rights for otherwise idle assets move between geographically distributed but connected and interactive online communities. Such circulation is apparent across a number of digital economic ecologies, including social media, online marketplaces, crowdsourcing, crowdfunding and other manifestations of the so-called ‘sharing economy’. Prevailing accounts deploy concepts such as ‘co-production’, ‘prosumption’ and ‘peer-to-peer’ to explain digital economic circulation as networked exchange relations characterised by their disintermediated, collaborative and democratising qualities. Building from the neologism of platform capitalism, we place ‘the platform’ – understood as a distinct mode of socio-technical intermediary and business arrangement that is incorporated into wider processes of capitalisation – at the centre of the critical analysis of digital economic circulation. To create multi-sided markets and coordinate network effects, platforms enrol users through a participatory economic culture and mobilise code and data analytics to compose immanent infrastructures. Platform intermediation is also nested in the ex-post construction of a replicable business model. Prioritising rapid up-scaling and extracting revenues from circulations and associated data trails, the model performs the structure of venture capital investment which capitalises on the potential of platforms to realise monopoly rents.

scholarly journals Entrepreneurial Passion and Venture Capitalists’ Willingness to Invest: The Role of Relational Capital

2021 ◽  
Vol 12 ◽  
Author(s):  
Hongtao Yang ◽  
Hangyu Shi ◽  
Yenchun Jim Wu ◽  
Lei Zhang ◽  
Shuting Xie
Keyword(s):  
Venture Capital ◽  
Capital Investment ◽  
Conflicts Of Interest ◽  
Positive Impact ◽  
Relational Capital ◽  
Venture Capitalists ◽  
Venture Capital Investment ◽  
Entrepreneurial Passion ◽  
The Relationship

Venture capital investment has serious conflicts of interest and information asymmetry. Venture capitalists often make investment decisions on the basis of the passion of entrepreneurs, including enthusiasm and preparedness, in the process of interacting with them. Most of the previous research on relational capital have focused on the cooperative relationship between suppliers and buyers. However, the role of relational capital in the process of partnership between venture capitalists and entrepreneurs has not been revealed. On the basis of signaling theory, we explore the relationship between entrepreneurial passion and venture capitalists’ willingness to invest. We also examine the mediating and moderating roles of relational capital. This study takes 79 projects between venture capitalists and entrepreneurs as samples for empirical analysis to verify our hypothesis. Results show that entrepreneurs’ enthusiasm and preparedness have a significant positive impact on venture capitalists’ willingness to invest. Relational capital plays a mediating role between entrepreneurial passion and venture capitalists’ willingness to invest. Relational capital positively moderates the relationship between preparedness and venture capitalists’ willingness to invest but has no moderating effect between enthusiasm and venture capitalists’ willingness to invest. Results deepen the understanding of the relationship between entrepreneurs’ passion and venture capitalists’ willingness to invest, which has guiding significance for venture capital practice in China.

scholarly journals Empirical Analysis of Hungarian Firms According to Venture Capital Investment Criteria

2016 ◽  
Vol 9 (1) ◽  
pp. 16-32
Author(s):  
Judit Edit Futó
Keyword(s):  
Venture Capital ◽  
Capital Investment ◽  
Selection Process ◽  
Statistical Tests ◽  
Venture Capitalists ◽  
Venture Capital Investment ◽  
Capital Financing ◽  
Venture Capital Firms ◽  
Investment Process ◽  
Index Investment

Abstract Over the past decade the venture capital industry has become more and more prominent, not just on a global level, but in Hungary, too. Thanks to the JEREMIE Program a large number of new venture capital firms are located in our country, and therefore an investment wave has started. The aim of the paper is to sort micro- and small sized enterprises in terms of how appropriate is a venture capital financing. The main topic of the paper relates to the selection of firms for venture capital investment; therefore, in the first part of the study we briefly summarize a general venture capital investment process, highlighting both the selection process and the criteria used for selection. Then we propose 3 indexes (trustworthiness index, openness index, investment index), which we have created to help venture capitalists to decide whether the targeted enterprises are appropriate for them, or not. In the main part of the paper we provide a classification of micro- and small sized Hungarian firms based on my own survey, and we analyze what kind of relationship exists between the proposed indexes and the type of the classified firms. The result of the classification is that we identify four main firm types and, based on statistical tests, it can be said that there is no significant relationship between the trustworthiness index and the clusters, but that there are between the two other indexes and the clusters.

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