Diversification, risk, and returns in venture capital

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dc.contributor.author Buchner, Axel
dc.contributor.author Mohamed, Abdulkadir
dc.contributor.author Schwienbacher, Armin
dc.date.accessioned 2017-07-04T09:13:36Z
dc.date.available 2017-07-04T09:13:36Z
dc.date.issued 2017-06-09
dc.identifier.citation Axel Buchner, Abdulkadir Mohamed, Armin Schwienbacher, Diversification, risk, and returns in venture capital. Journal of Business Venturing, Volume 11, Issue 2, 2018, pp. 103-125 en_UK
dc.identifier.issn 0883-9026
dc.identifier.uri http://dx.doi.org/10.1016/j.jbusvent.2017.05.005
dc.identifier.uri http://dspace.lib.cranfield.ac.uk/handle/1826/12149
dc.description.abstract We explore an alternative, finance theory-based explanation for the documented positive relationship between fund diversification (or lack of fund specialization) and performance in venture capital (VC). Our proposed “Risk Hypothesis” posits that the expected negative impact of diversification on fund risk induces fund managers to endogenously select riskier investments, which in turn leads to higher performance of more diversified funds. While other channels may also be at play, we provide results that support this hypothesis for an international sample of VC funds. However, this effect is weakened when expertise is limited. The study offers implications of how VC fund managers' investment decisions are influenced by strategic portfolio considerations, which in turn affect which innovative ventures receive funding. en_UK
dc.language.iso en en_UK
dc.publisher Elsevier en_UK
dc.rights Attribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subject Venture capital en_UK
dc.subject Diversification en_UK
dc.subject Risk en_UK
dc.subject Entrepreneurial finance en_UK
dc.subject Venture finance en_UK
dc.title Diversification, risk, and returns in venture capital en_UK
dc.type Article en_UK

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