Changing the Nexus: The Evolution and Renegotiation of Venture Capital Contracts

Reprint No. 2015:42

Author(s): Ola Bengtsson and Berk A. SensoyYear: 2015 Title: Journal of Financial and Quantitative Analysis Volume (No.): 50 (3) Pages: 349–375
Online article (restrictions may apply)

We study the evolution and renegotiation of the cash-flow rights that venture capitalists (VCs) obtain in their portfolio companies. When company performance between financing rounds is poor, subsequent contracts contain stronger VC cash-flow rights, and existing VCs tend to either give new VCs senior claims or forfeit their existing rights altogether. These results are consistent with the importance of financing problems between different VCs and with theory predicting that financing frictions worsen with poor performance. A consequence is that VC cash-flow rights are frequently significantly diluted before exit, implying that VC investments are riskier than previously estimated.

Bengtsson, Ola and Berk A. Sensoy (2015), "Changing the Nexus: The Evolution and Renegotiation of Venture Capital Contracts". Journal of Financial and Quantitative Analysis 50(3), 349–375.

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.


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To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

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In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

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