This paper shows that geographical elements can form an essential component of contract design in addition to more traditional ingredients such as information problems, moral hazard and legal institutions. We analyze cash flow contingencies included in 1,804 contracts between U.S. venture...

I show that VCs frequently have the right to veto specific operational and financial decisions even though they are equity investors with access to other powerful governance mechanisms. Across 182 first-round U.S. venture capital investments, restrictive covenants are commonplace with 92 percent...