Venture Capital and Underpricing: Capacity Constraints and Early Sales
نویسنده
چکیده
We present a new theory about underpricing and Venture Capital-backed (VC-backed) companies where the key feature is capacity constraints Venture Capital firms can take only a limited number of new projects. This model can match the evidence gathered by the empirical literature on the grandstanding hypothesis, i.e., that younger Venture Capitalists rush to Initial Public Offers (IPOs). Moreover, our set up can address new questions, as the impact of hot issues market and technological shocks on VC-backed firms’ underpricing, being a unified framework for many issues present in the literature .
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