Determinants of success in venture capital investments: evidence from Brazil

We investigate the determinants of the success of private equity/venture capital funds. We focus specially on a Brazilian idiosyncrasy: the participation of limited partners in the investment process through investment committees (ICs) staffed with their representatives. In principle, ICs could subs...

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Bibliographic Details
Published in:Venture capital (London) 2017-07, Vol.19 (3), p.147-161
Main Authors: De Carvalho, Antonio Gledson, Gallucci-Netto, Humberto, Siqueira, Eduardo M. R.
Format: Article
Language:English
Subjects:
Capital investments
Creditors
Equity
Idiosyncrasy
investment exit
investment performance
Investments
investors committee
Private equity
Success
Venture capital
Venture capital companies
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Summary:We investigate the determinants of the success of private equity/venture capital funds. We focus specially on a Brazilian idiosyncrasy: the participation of limited partners in the investment process through investment committees (ICs) staffed with their representatives. In principle, ICs could substitute for the ex post screening that creditors do in levered buyouts. We find that funds with ICs underperform other funds, suggesting that ICs are not a good alternative for creditors screening. We also find that funds managed by bank affiliates underperform those managed by independent organizations. Finally, retention of equity control on portfolio companies affects positively their success.
ISSN:1369-1066
1464-5343
DOI:10.1080/13691066.2016.1247504