Building Relationships Early: Banks in Venture Capital

Hellmann, Thomas, Lindsey, Laura and Puri, Manju (2008) Building Relationships Early: Banks in Venture Capital. The Review of Financial Studies, 21 (2). pp. 513-541.

Abstract

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.

Item Type: Article
Keywords: venture capital; banks; finance
Subject(s): Finance
Related URLs:
Date Deposited: 11 Dec 2014 11:44
Last Modified: 27 Feb 2017 10:44
URI: http://eureka.sbs.ox.ac.uk/id/eprint/5229

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