The Determinants of Venture Capital Portfolio Size: Empirical Evidence*

This paper explores factors that affect portfolio size among a sample of venture capital financing data from 214 Canadian funds. Four categories of factors affect portfolio size: (1) the venture capital funds' characteristics, including the type of fund, fund duration, fund-raising, and the number of venture capital fund managers; (2) the entrepreneurial firms' characteristics, including stage of development, technology, and geographic location; (3) the nature of the financing transactions, including staging, syndication, and capital structure; and (4) market conditions. The data further indicate decreasing returns to scale in the number of entrepreneurial firms financed by a venture capital fund.