Small Business Economics

, Volume 26, Issue 4, pp 337–350 | Cite as

Venture Capitalists, Syndication and Governance in Initial Public Offerings

  • Igor Filatotchev
  • Mike Wright
  • Mufit Arberk


This paper examines the development of effective boards in venture capital (VC)-backed initial public offerings. It argues that VC-backed IPOs suffer from two sets of agency costs which are related to principal–agent and principal–principal relationships between the founders and members of the VC syndicate. Using a unique sample of 293 entrepreneurial IPOs in the UK it shows that VC syndicates invest in relatively more risky firms. VC-backed IPOs have more independent boards than IPOs with no VC involvement, with board independence being higher in syndicated VC-backed firms. These results are consistent with assumption that these governance factors are used to mitigate agency costs associated with VC involvement in IPO firms. We also find that in syndicated IPOs there is a higher equity presence of passive private equity firms investing alongside VC firms.


Venture Capital Agency Cost Initial Public Offering Private Equity Board Independence 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer 2006

Authors and Affiliations

  1. 1.King’s College LondonLondonUK
  2. 2.Centre for Management Buy-out ResearchNottingham University Business SchoolNottinghamUK
  3. 3.Bradford University School of ManagementBradfordUK

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