Dr. Lukas König

Limited partners allocate capital into venture capital funds with the expectation of a risk-
return profile matching the fund’s investment style in terms of startup investment stage, location, and industry. This paper draws a connection between style drifts in these three dimensions and the connected risk-taking attitude of the general partner. By analyzing a sample of 31,521 investments concerning the motivation for style drifts, this paper seeks to answer whether style drifts are… Mehr anzeigen

Limited partners allocate capital into venture capital funds with the expectation of a risk-
return profile matching the fund’s investment style in terms of startup investment stage, location, and industry. This paper draws a connection between style drifts in these three dimensions and the connected risk-taking attitude of the general partner. By analyzing a sample of 31,521 investments concerning the motivation for style drifts, this paper seeks to answer whether style drifts are deliberate risk shifts or happen out of competitive pressure.
The results suggest that venture capitalists increase risk when they have strong past performance and public markets are bullish to make the most of the balance of compensation and employment incentives. This balancing most likely constitutes an agency conflict between limited partners and general partners. Further, results show that riskier style drifts have a negative impact on investment performance even after controlling for performance persistence and endogeneity. Finally, the findings show that aggregate style drift has a negative effect on a fund’s performance measured as its exit rate. Weniger anzeigen

A high level of information asymmetry is characterizing for venture capital investments making new information about entrepreneurial companies especially valuable for a venture capitalist’s valuation process. This paper uses text classification and text mining methodology to extract structured data about capital allocation plans in a unique sample of 1,550 European funding rounds that serves as proxy for the private informational updates shared with investors by entrepreneurs. We show that… Mehr anzeigen

A high level of information asymmetry is characterizing for venture capital investments making new information about entrepreneurial companies especially valuable for a venture capitalist’s valuation process. This paper uses text classification and text mining methodology to extract structured data about capital allocation plans in a unique sample of 1,550 European funding rounds that serves as proxy for the private informational updates shared with investors by entrepreneurs. We show that venture capitalists incorporate the content and specificity of information into their valuation process. Further, results confirm that the value of new information is dependent on the prevailing level of information asymmetry. Weniger anzeigen

University affiliations of founders and investors in venture capital deals might affect the initial investment decision and the subsequent funding relationship through two channels. First, attending a top university might act as a founder-quality signal to investors, and second, belonging to the same university alumni network might reduce issues related to information asymmetry between investors and founders. This paper exploits a unique sample of 42,101 investments by U.S. and European venture… Mehr anzeigen

University affiliations of founders and investors in venture capital deals might affect the initial investment decision and the subsequent funding relationship through two channels. First, attending a top university might act as a founder-quality signal to investors, and second, belonging to the same university alumni network might reduce issues related to information asymmetry between investors and founders. This paper exploits a unique sample of 42,101 investments by U.S. and European venture capital firms involving 38,452 individuals to explore the role of university affiliations with a special focus on educational ties between founders and investors. Results confirm that educational ties increase investment likelihood irrespective of a university’s quality. Further, the analysis shows that educational ties deepen the funding relationship and increase the willingness of investors to take on riskier investments. Investors are more likely to lead the investment syndicate, take a board seat, or invest in the first round in the presence of educational ties. Finally, the results indicate that an IPO is more likely for investments with educational ties. Weniger anzeigen

Cryptocurrencies have become one of the most important and most disputed aspects in financial markets. However, the understanding of the price formation process for blockchain-based cryptocurrencies is still limited. This paper analyzes factors influencing the price of the five cryptocurrencies Bitcoin, Ethereum, Dash, Litecoin, and Monero in the time between January 2014 and July 2017. We conduct a Granger Causality study by estimating vector autoregressive models, vector error correction… Mehr anzeigen

Cryptocurrencies have become one of the most important and most disputed aspects in financial markets. However, the understanding of the price formation process for blockchain-based cryptocurrencies is still limited. This paper analyzes factors influencing the price of the five cryptocurrencies Bitcoin, Ethereum, Dash, Litecoin, and Monero in the time between January 2014 and July 2017. We conduct a Granger Causality study by estimating vector autoregressive models, vector error correction models, and autoregressive distributed lag models in order to test previously developed hypotheses on price determinants. The results suggest that the proportion of value of the global cryptocurrency portfolio as well as public attention are the two key factors that drive prices. The findings indicate that cryptocurrencies are subject to the formation of price bubbles, due to the reinforcing mechanism of positive feedback trading, herding, and public attention. Weniger anzeigen