Raising Capital from Heterogeneous Investors
Abstract
A firm raises capital from multiple investors to fund a project. The project succeeds only if the capital raised exceeds a stochastic threshold, and the firm offers payments contingent on success. We study the firm’s optimal unique-implementation scheme, namely the scheme that guarantees the firm the maximum payoff. This scheme treats investors differently based on size. We show that if the distribution of the investment threshold is...
Paper Details
Title
Raising Capital from Heterogeneous Investors
Published Date
Mar 1, 2020
Journal
Volume
110
Issue
3
Pages
889 - 921
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