REEVALUATING STAGING STRATEGIES IN VENTURE CAPITAL: COMPARATIVE IMPACTS ON PORTFOLIO-WIDE VERSUS SINGLE INVESTMENT PERFORMANCES

Abstract

This paper analyses the staging strategies employed by venture capitalists (VCs). The study concentrates on how staging affects the multiple on invested capital (MOIC) for both individual investments and portfolios of venture capital investments. The results reveal that the impact of staging relies on the correlation between past and future performance of venture capital portfolio companies. It also demonstrated that the risk mitigation effect of staging is less pronounced when evaluating the performance of an investment portfolio, as opposed to a single investment. Consequently, VCs should base their staging decisions on more than just the idiosyncratic risk of the current investment. They should also consider the extent to which performance across investment rounds predicts future outcomes and how staging a specific investment influences overall fund performance.