Private Debt and the Role of Venture Capital & Private Equity Sponsors

Axel Buchner, Susanne Espenlaub, Arif Khurshed, Abdulkadir Mohamed

Research output: Contribution to journalArticlepeer-review

27 Downloads (Pure)

Abstract

This is the first study examining the key role played by venture capital and private equity (VCPE) firms in the private debt market. Private debt funds invest in companies owned (sponsored) by VCPEs and in other companies without VCPE sponsors. Using novel data, we find that private debt without VCPE sponsors generates a premium. Further analysis shows that this sponsorless premium compensates for higher risk and costs of risk mitigation as sponsorless lenders adopt a more hands-on approach emulating VCPE sponsors’ roles. Our results are robust and provide important lessons for investors and investee firms in private debt, venture lending, and VCPE.

Original languageEnglish
Pages (from-to)372-395
Number of pages24
JournalMANAGEMENT SCIENCE
Volume70
Issue number1
DOIs
Publication statusPublished - 10 Jan 2024

Fingerprint

Dive into the research topics of 'Private Debt and the Role of Venture Capital & Private Equity Sponsors'. Together they form a unique fingerprint.

Cite this