Abstract
This paper intends to complement the existing literature on the performance of venture capital (VC) investments by presenting a multiple principal-agent framework for examining partner selection strategies aimed at mitigating uncertainties and their effects on investment performance and boundary conditions. Using a dataset of VC investments from 1980 and 2008 in the U.S., we found evidence that the existence of industrial and geographic uncertainties negatively affects the performance of independent VC (IVC) investments. The empirical results show that the strategy of partner selection has no effect on IVC performance. However, from the homophily and resource perspectives, if various VC-specific uncertainties are considered as contextual factors, one would expect CVC firms to be selected as partners by IVC firms as a way to increase the probability of success.
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