Venture capital contracts

We estimate the impact of venture capital (VC) contract terms on startup outcomes and split value between entrepreneur investor, accounting for endogenous selection via a novel dynamic search-and-matching model. The estimation uses new, large data set first financing rounds companies. Consistent with efficient contracting theories, there is an optimal equity agents, which maximizes probability success. However, capitalists (VCs) use their bargaining power to receive more investor-friendly compared that values. Better VCs still benefit due positive creation. Counterfactuals show reducing search frictions shifts benefits them at expense entrepreneurs. results agents into deals first-order factor take account in studies contracting.