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When and Why Do Venture-Capital-Backed Companies Obtain Venture Lending?

  • Tereza Tykvová


I model the decision of an informed early-stage venture capital (VC) investor that considers involving an uninformed VC or venture lending (VL) investor to finance the late stage. Early-stage VC investors that own high-quality value companies tend to signal their quality and they frequently turn to VL investors. Early-stage VC investors prefer VC if the proportion of high-quality companies in the population is high, if their companies have a high upside potential, if they can benefit from the value that late-stage VC investors add, or if uncertainty is high. I find empirical evidence consistent with these predictions.


Corresponding author

* Tykvová (corresponding author),, Institute for Financial Management, University of Hohenheim.


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I am thankful to Douglas Cumming (the referee), Paul Malatesta (the editor), and the participants of the 2015 Financial Management Association European conference and the 2014 Paris Financial Management conference for their comments. I gratefully acknowledge access to Dow Jones Venture Source, Bureau van Dijk Orbis, Standard & Poor’s Capital IQ, Thomson ONE, and Datastream provided by DALAHO, University of Hohenheim. I thank Tim Pollock for providing me with the data on VC reputation. Julia Stefanchuk and Urs Schopp-Leypoldt provided invaluable assistance during the data-collection phase. All errors are my own.



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When and Why Do Venture-Capital-Backed Companies Obtain Venture Lending?

  • Tereza Tykvová


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