Jens Burchardt is Project Leader, Boston Consulting Group, Berlin, Germany.
Venture Capital Contracting in Theory and Practice: Implications for Entrepreneurship Research
Version of Record online: 3 APR 2014
© 2014 Baylor University
Entrepreneurship Theory and Practice
Volume 40, Issue 1, pages 25–48, January 2016
How to Cite
Burchardt, J., Hommel, U., Kamuriwo, D. S. and Billitteri, C. (2016), Venture Capital Contracting in Theory and Practice: Implications for Entrepreneurship Research. Entrepreneurship Theory and Practice, 40: 25–48. doi: 10.1111/etap.12104
The authors thank the editor, Douglas Cumming, and two anonymous reviewers for their helpful comments and guidance. All remaining errors are solely the authors’ responsibility.
- Issue online: 21 JAN 2016
- Version of Record online: 3 APR 2014
This article provides a comprehensive theoretical and empirical literature review of venture capital contracts. This outlines the differences between theoretical and practical uses of contract designs; that is, (1) how does the choice of securities give rise to different adverse selection problems in terms of attracting different types of entrepreneurial companies; how does the choice of securities in conjunction with cash flow and control rights provisions affect (2) the effort levels by the entrepreneur and the investor; and (3) ultimately affect entrepreneurial outcomes. This article highlights the major discrepancies between theory and practice and points out potential avenues for further research.