Building relationships early: Banks in venture capital

Published

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