Chapter 03 Questions and Problems

Chapter 03 Questions and Problems - ENTREPRENEURIAL FINANCE...

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E NTREPRENEURIAL F INANCE : Strategy Valuation and Deal Structure Chapter 3. Venture Capital Questions and Problems 1. The early venture capital funds were organized as closed-end funds. More recently, most venture capital funds are being organized as limited partnerships. What do you see as the key differences between the two forms that help explain the shift? 2. Refer to Figure 3.1. What factors led to the dramatic increase in commitments to VC funds in 1978? 3. How do the reputations of fund managers, investors, and entrepreneurs bear on the efficient operation of a venture capital fund? How do you think venture capital contracts might be different when a manager, investor, or entrepreneur does not have an established reputation? 4. In the late 1990s, the carried interest of some of the leading venture capital funds increased from 20 percent to 30 percent, and the funds have tended to shift more of their focus to making somewhat later-stage investments. These changes occurred at the same time that the number of venture
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