Role of the Value Added by the Venture Capitalists in Timing and Extent of IPOs

Within a single model, the author explains how a venture capitalist chooses the timing, the price and the amount of shares to be sold in an initial public offering (IPO). The author concludes that the difference between the venture capitalist and the new investors who buy shares at the IPO is that the former offers not only money but also managerial support that may enhance the value of the firm.