Learning by Monitoring: The Impact of Monitoring on VC Re-Investment Performance

Jack (Xiaoyong) Fu, PhD Candidate, The Wharton School

Abstract: This project aims to investigate the impact of monitoring on VC reinvestment performance. Using novel data sources, I construct a proxy for monitoring and test the causal relationship between monitoring and investment outcomes. To address the endogeneity issue regarding monitoring, I use the traveling population as an instrumental variable for VC’s monitoring intensity. The findings will provide insights into the role of monitoring in the investment decision-making process and its implications for VC performance, and may inform industry practices to ultimately lead to more efficient resource allocation in the VC industry.