How and When Investment Horizons Determine Venture Capital Firms’ Attention Breadth to Portfolio Companies
Violetta Bacon-Gerasymenko, Jonathan D. Arthurs, Sam Y. Cho
Entrepreneurship Theory and Practice · 2020 · Volume 44 · Issue 3
Abstract
This study develops and tests a theory about the antecedents of venture capital firms’ (VCs’) attention breadth to their portfolio companies (PFCs). We find that VCs expand their attention breadth but only up to a certain level of expected investment horizons for each PFC, after which attention breadth narrows. We also find that this inverted U-shaped relationship is contingent upon the VC investment horizon dispersion and the number of co-investors in a given PFC. Our research advances the entrepreneurship and venture capital literature and provides novel insight into the broader literature on investment horizons and strategic alliances.
Keywords
venture capital, attention breadth, expected investment horizons, investment horizon dispersion, syndication
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