Building relationships early: Banks in venture capital
Journal Article (Journal Article)
This paper examines bank behavior in venture capital. It considers the relation between a bank's venture capital investments and its subsequent lending, which can be thought of as intertemporal cross-selling. Theory suggests that unlike independent venture capital firms, banks may be strategic investors who seek complementarities between venture capital and lending activities. We find evidence that banks use venture capital investments to build lending relationships. Having a prior relationship with a company in the venture capital market increases a bank's chance of subsequently granting a loan to that company. Companies can benefit from these relationships through more favorable loan pricing.
Full Text
Duke Authors
Cited Authors
- Hellmann, T; Lindsey, L; Puri, M
Published Date
- April 1, 2008
Published In
Volume / Issue
- 21 / 2
Start / End Page
- 513 - 541
Electronic International Standard Serial Number (EISSN)
- 1465-7368
International Standard Serial Number (ISSN)
- 0893-9454
Digital Object Identifier (DOI)
- 10.1093/rfs/hhm080
Citation Source
- Scopus