kaal:claim:3962614-011

Because venture capitalists typically want to cash out their gains five to ten years after the initial investment, they play an active role in directing portfolio companies toward a merger, acquisition, or public offering, which can carry significant downsides for those companies and their products.

Source quote, verbatim

because capitalists typically want to cash-out their gains five to ten years after initial investments, they play an active role in directing the company towards a merger, acquisition, or public

From

Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021), II.1.c) Cost of Deal Screening and Structuring, p. 9
https://ssrn.com/abstract=3962614 · source PDF

Cite as

Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614

Holds when

VC backed portfolio companies approaching the exit window

Classification

mechanismsupport: arguedfailure: Exit driven short termismfamily: short-termismrisk-and-incentivesinnovation

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