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Publications
Publications
Financial Intermediary Relationships and Public Market Access (Review of Finance 2025)
with Emmanuel Yimfor
We provide novel causal evidence on the impact of horizontal relationships between financial intermediaries. Specifically, we study how the exogenous loss of established ties between venture capital firms (VCs) and investment bank underwriters, caused by underwriter mergers and closures, affects a VCs' ability to take portfolio companies public. Using a difference-in-differences approach, we show these disruptions decrease VC IPO exits by 9.5% and reduce fund multiples by 7.8%. These findings highlight the economic significance of relationship-specific capital, particularly human capital, in facilitating access to capital markets and reveal how intermediary networks shape VC performance.
Working Papers
Working Papers
Replicating the GP? Evidence on LP Value-Add in Co-Investments
with Richard Maxwell and Natasha Boryeko
We study whether limited partners (LPs) create value when they move beyond their traditional role as capital providers and participate directly in start-up investments through co-investments. Using geographic proximity to start-ups as an instrument for LP involvement, we find that LP participation is associated with improved exit outcomes even after accounting for quality selection. We explore potential mechanisms, including the alleviation of financial constraints, enhanced monitoring, and the accumulation of expertise as LPs gain experience with repeated co-investments. We also examine the interaction between LP and GP expertise to assess whether performance improvements reflect exposure to skilled GPs or whether experienced LPs can replicate the value typically attributed to GPs. Our findings contribute to the debate on the distinctiveness of GP value-add by asking whether LPs can, under certain conditions, effectively play the role of their own GPs.
Why do private equity (PE) general partners (GPs) leave valuable fees on the table to offer co-investment opportunities to limited partners (LPs), and why to some LPs but not others? Prior work speaks to the performance of co-investments conditional on access, but is largely silent on which LPs are provided access in the first place and why. I show that co-investment is a benefit LPs value, through which GPs share surplus with those holding greater bargaining power, complementing rather than substituting for main-fund fee discounts. To identify this channel, I exploit the Volcker Rule as a plausibly exogenous shock that removed bank capital from affected funds and raised the bargaining power of their remaining LPs. A one standard deviation increase in a fund's exposure to the loss of bank LPs raises co-investment by 11.7%. I document a novel co-investment function tied to the hedging of liquidity risk. Using PE secondary market activity, I find that LPs more exposed to liquidity risk co-invest more, consistent with co-investment granting LPs control over the timing of their capital outlays. This effect concentrates in co-investments over which LPs retain discretion and is absent in GP-directed deals, consistent with this option-value attribute of co-investment.
Do Venture Capital Networks Discourage Investment? (2021 Working Paper)
Network relationships are critical to the investment opportunity sets and outcomes of VC funds. I study whether VC funds are hesitant to make investment decisions that may damage important VC network relationships. I do so by investigating the effect of startup investments by the largest of VC funds on VC finance prospects for same-industry startups, similar in observable characteristics. Quarterly probability of VC finance for these competitor startups decreases by 0.84%, a 15% drop from the pre-event average. Quarterly amount of VC finance drops by about $22,700, a 5% decline from before. I find that bank and SBA loans do not meaningfully change for these firms after the event. The drop in VC finance is stronger among those previously backed by VCs with a syndicate history with the super-large VC. I interpret this evidence as favoring a networks explanation above alternative hypotheses related to lower firm quality.
Capital Gains Taxation and Venture Capital Exit Strategies (2020, Work in progress)
I propose a simple model to study the effect of a change in the capital gains tax rate on the exit decision of a general partner in a venture capital firm from a firm in their investment portfolio. The model investigates a tax-induced agency friction, which restricts a VC general partner’s ability to offset losses elsewhere in their portfolio. Under this framework, I predict that (due to the call-option compensation enjoyed by the otherwise risk-averse GP) the magnitude of downside risk in the IPO will govern the change in the GP’s propensity to choose to exit via IPO.
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