• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 10. Venture Capital Funds > Exit Strategies of Investments by Venture C...

Exit Strategies of Investments by Venture Capital Funds

Historically, the majority of the return earned by venture capital funds results from portfolio companies either reaching the public market by way of an offering or being bought out by other companies. On average, at the time of public offering, venture capital funds hold more than 30% of the company's equity, with the leading investor holding more than 15% of the company and appointing approximately one-third of the representatives to the company's board of directors. This rate is preserved (mainly due to lock up clauses in the offering arrangement) for approximately one year after the offering.

An interesting phenomenon is that highly regarded venture capital funds have an impact on increasing the valuation of shares comparable to similar companies going public at the same time. The argument is that good venture capital funds know how to choose more successful companies and/or that the best investment opportunities are typically presented to them as well. In addition, offerings of companies which are backed by venture capital funds are often made by underwriters with more experience in the particular type of company in question, and the holdings of institutional investors in the company after the offering are higher.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint