Innovation, Spillovers and Venture Capital Contracts

Dessi, Roberta (2011) Innovation, Spillovers and Venture Capital Contracts. TSE Working Paper, n. 11-253, Toulouse

[img]
Preview
Text
Download (260kB) | Preview
Official URL: http://tse-fr.eu/pub/24944

Abstract

Innovative start-ups and venture capitalists are highly clustered: Silicon Valley is probably the best-known example. Clusters differ in the contracts they use, and in how they perform. I explore the link between spillovers, contractual design and performance. I find that more "incomplete" contracts, with fewer contingencies linking entrepreneurs’ rewards to performance benchmarks, become optimal when positive spillovers are large. The contracts enable the innovative entrepreneur and his investor to extract some of the surplus they generate through positive spillovers for new entrants. This provides a new rationale for contractual incompleteness, and may help to explain observed contractual practice in Silicon Valley.

Item Type: Monograph (Working Paper)
Language: English
Date: December 2011
Place of Publication: Toulouse
Uncontrolled Keywords: innovation, spillovers, venture capital, incomplete contracts
JEL codes: D82 - Asymmetric and Private Information
D86 - Economics of Contract - Theory
G24 - Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
L22 - Firm Organization and Market Structure - Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 18 Jan 2012 06:04
Last Modified: 20 Mar 2018 13:29
OAI ID: oai:tse-fr.eu:24944
URI: http://publications.ut-capitole.fr/id/eprint/3607

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year