Mutual Funds as Venture Capitalists? Evidence from Unicorns / Sergey Chernenko, Josh Lerner, Yao Zeng.

Format:

Book

Author/Creator:

Chernenko, Sergey.

Contributor:

National Bureau of Economic Research.

Lerner, Josh.

Zeng, Yao.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23981.

NBER working paper series no. w23981

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

Using novel contract-level data, we study the recent trend in open-end mutual funds investing in unicorns--highly valued, privately held start-ups--and the consequences of these investments for corporate governance provisions. Larger funds and those with more stable funding are more likely to invest in unicorns. Compared to venture capital groups (VCs), mutual funds have weaker cash flow rights and are less involved in terms of corporate governance, being particularly underrepresented on boards of directors. Having to carefully manage their own liquidity pushes mutual funds to require stronger redemption rights, suggesting contractual choices consistent with mutual funds' short-term capital sources.

Notes:

Print version record

October 2017.