New insights into venture capitalists activity: IPO and time-to-exit forecast as antecedents of their post-investment involvement

We examine how VCFs' forecast of an IPO exit affects their breadth of advising and the likelihood of founder-CEO replacement shortly after they invest in a new venture. Moreover, we examine how the expected time-to-exit moderates these relationships. Our findings show that the likelihood of founder-CEO replacement upon receiving venture capital funding is significantly greater if a VCF perceives this company as a potential IPO as opposed to a trade sale, and this likelihood increases if the forecasted time-to-exit is short. We also illustrate how the breadth of advice varies as a function of the forecasted IPO and time-to-exit. (c) 2013 Elsevier Inc. All rights reserved.