Diversification, risk, and returns in venture capital

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dc.contributor.authorBuchner, Axel
dc.contributor.authorMohamed, Abdulkadir
dc.contributor.authorSchwienbacher, Armin
dc.date.accessioned2017-07-04T09:13:36Z
dc.date.available2017-07-04T09:13:36Z
dc.date.issued2017-06-09
dc.description.abstractWe 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.identifier.citationAxel Buchner, Abdulkadir Mohamed, Armin Schwienbacher, Diversification, risk, and returns in venture capital. Journal of Business Venturing, Volume 11, Issue 2, 2018, pp. 103-125en_UK
dc.identifier.issn0883-9026
dc.identifier.urihttp://dx.doi.org/10.1016/j.jbusvent.2017.05.005
dc.identifier.urihttp://dspace.lib.cranfield.ac.uk/handle/1826/12149
dc.language.isoenen_UK
dc.publisherElsevieren_UK
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subjectVenture capitalen_UK
dc.subjectDiversificationen_UK
dc.subjectRisken_UK
dc.subjectEntrepreneurial financeen_UK
dc.subjectVenture financeen_UK
dc.titleDiversification, risk, and returns in venture capitalen_UK
dc.typeArticleen_UK

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