One of the class exercises is a negotiation where some students are the management and other students are the venture capitalists. The students realize that it’s very hard to reach an agreement when there’s so much uncertainty.
My work is at the boundary of economics and sociology. The largest stream of my research is about economic geography and, in particular, how social networks affect the productivity of regions. I’ve been working on a very large project looking at how venture capital in a region affects entrepreneurship and the growth of the region.
We find that having more venture capital seems to be important to stimulating entrepreneurship and to the economic vitality of the region. But we also find some interesting contingencies—for example, venture capital is far more effective in generating economic returns in states that do not enforce non-compete agreements. That’s probably because both entrepreneurs and potential employees aren’t locked up in non-compete agreements with their former employers.
I also teach an elective class on venture capital. It’s taught from the point of view of the venture capitalist, but it’s also relevant to someone who might want to start a business.
One of the class exercises is a negotiation where some students are the management and other students are the venture capitalists. The students realize that it’s very hard to reach an agreement when there’s so much uncertainty—even if they have just slightly different beliefs about the prospects for the business.
For the final project in the course, we partner with Yale’s Office of Cooperative Research and the students look at actual technology coming out of Yale’s labs to try to assess whether it is something that a venture capitalist might invest in. It’s useful for both sides. OCR gets some information about which of these projects they should pay more attention to, and the students get some experience in assessing an actual potential investment.
Interviewed on April 21, 2010.