2015/10/13 by SHAI BERNSTEIN, Shai Bernstein, XAVIER GIROUD +3 · 766 citations
Business, Management and Accounting · Decision Sciences · #Auction Theory and Applications #Business #Capital (architecture) #Computer science #Corporate Finance and Governance #Finance #Geography #Industrial organization #Portfolio #Private Equity and Venture Capital #Scale (ratio) #Selection (genetic algorithm) #Venture capital
paper · doi:10.1111/jofi.12370
published in The Journal of Finance 71(4), 1591-1622 (Wiley)
openalex publication_date 2015/10/13 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
ABSTRACT We show that venture capitalists' (VCs) on‐site involvement with their portfolio companies leads to an increase in both innovation and the likelihood of a successful exit. We rule out selection effects by exploiting an exogenous source of variation in VC involvement: the introduction of new airline routes that reduce VCs' travel times to their existing portfolio companies. We confirm the importance of this channel by conducting a large‐scale survey of VCs, of whom almost 90% indicate that direct flights increase their interaction with their portfolio companies and management, and help them better understand companies' activities.