Venture Capital as Human Resources Management∗

This article proposes that venture capitalists adds value within portfolio firms by transferring information about senior managers across firms — A valuable feature since it is difficult to transfer information about senior managers in small firms in a systematic fashion. This transfer occurs on a significant scale because venture capitalists operate a network, within which they are involved in locating and relocating managers. Theoretical and empirical analyses indicate that the factors relevant to explain the intensity with which venture capitalists network include: 1) the value of the information transmitted through the network 2) the difficulty found to entice executives to manage firms funded with venture capital; and 3) the gains that the venture capitalists who suggest managers can obtain when enticing managers to accept job offers. JEL classification G24