Venture capital equity allocation and its causes:an empirical study from negotiation perspective using data of Zhejiang Province

Abstract

Abstract: Equity allocation is a key issue in venture capital, however, current research focuses on optimal arrangement and institution design, ignories the reality and its causes. A theoretical framework is built to analyze the sources of bargaining power and equity allocation from the perspective of negotiation. Combined with an empirical analysis of sample data from Zhejiang Province, several results are achieved.Financial and human resources have different effects on equity allocation. The venture capital firms' investment amount is positive correlated with their equity proportion, and the correlation will become weaker with the development of start-ups. The entrepreneur's investment amount is not a source of significant bargaining power. The entrepreneur's business experience is negative correlatied with venture capital firm's equity proportion ,and the correlation will also become weaker with the development of start-ups.Venture capital firms' experience is significantly negative correlatied with their equity proportion.

Key words: venture capital, equity allocation, bargaining power

Xu Mengzhou. Venture capital equity allocation and its causes:an empirical study from negotiation perspective using data of Zhejiang Province[J]. Science Research Management, 2011, 32(12): 82-88.

References

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