Do venture capital firms benefit from a presence on boards of directors of mature public companies?

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Title: Do venture capital firms benefit from a presence on boards of directors of mature public companies?
Author: Hasan, Iftekhar ; Khurshed, Arif ; Mohamed, Abdulkadir ; Wang, Fan
Series: Journal of Corporate Finance
Series volume: 49
Series number: April 2018
Year of publication: 2018
Publication date: 29.12.2017
DOI: https://doi.org/10.1016/j.jcorpfin.2017.04.018
Page range: 125-140
Subject (yso): yritykset; johtokunnat; riskipääoma; riskirahoitus; riskipääomasijoitukset; rahoitus
JEL: G24; G3
Other keywords: venture capital; board; directorships; public companies; exits
Abstract: This paper examines the benefits to venture capital firms of their officers holding directorships in mature public companies in terms of fundraising and investment performance. Our empirical results show that venture capital firms raise more funds, set higher fund-raising targets, and are more likely to successfully exit their investments post-appointment of their officers to boards of directors of S&P 1500 companies. Directorship status in mature public firms provides venture capital firms with enhanced networks, visibility, and credibility, all of which facilitate their fundraising activities. In addition, the knowledge, expertise, and experience acquired through holding directorships in mature public firms are beneficial for their portfolio companies, as measured by the likelihood of successful exits.


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