The Effect of Capital Market Characteristics on the Value of Start-Up Firms

@article{Mueller2002TheEO,
  title={The Effect of Capital Market Characteristics on the Value of Start-Up Firms},
  author={H. Mueller and R. Inderst},
  journal={Corporate Finance: Capital Structure & Payout Policies},
  year={2002}
}
  • H. Mueller, R. Inderst
  • Published 2002
  • Economics, Business
  • Corporate Finance: Capital Structure & Payout Policies
  • We develop an equilibrium model of contracting, bargaining, and search in which the relative scarcity of venture capital affects the bargaining power of entrepreneurs and venture capitalists. This in turn affects the pricing, contracting, and value creation in start-ups. The relative scarcity of venture capital is endogenous and depends on the profitability of venture capital investments, entry costs, and transparency of the venture capital market. Supply and demand conditions also affect the… CONTINUE READING
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