NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Venture Capital Investment Cycles: The Impact of Public Markets

Paul Gompers, Anna Kovner, Josh Lerner, David Scharfstein

NBER Working Paper No. 11385
Issued in May 2005
NBER Program(s):   AP   CH   PR

It is well documented that the venture capital industry is highly volatile and that much of this volatility is associated with shifting valuations and activity in public equity markets. This paper examines how changes in public market signals affected venture capital investing between 1975 and 1998. We find that venture capitalists with the most industry experience increase their investments the most when public market signals become more favorable. Their reaction to an increase is greater than the reaction of venture capital organizations with relatively little industry experience and those with considerable experience but in other industries. The increase in investment rates does not affect the success of these transactions adversely to a significant extent. These findings are consistent with the view that venture capitalists rationally respond to attractive investment opportunities signaled by public market shifts.

download in pdf format
   (261 K)

email paper

This paper is available as PDF (261 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11385

Published: Gompers, Paul & Kovner, Anna & Lerner, Josh & Scharfstein, David, 2008. "Venture capital investment cycles: The impact of public markets," Journal of Financial Economics, Elsevier, vol. 87(1), pages 1-23, January.

Users who downloaded this paper also downloaded these:
Gompers, Kovner, Lerner, and Scharfstein w12592 Skill vs. Luck in Entrepreneurship and Venture Capital: Evidence from Serial Entrepreneurs
Gompers and Lerner w6906 What Drives Venture Capital Fundraising?
Gompers and Lerner w6725 The Determinants of Corporate Venture Capital Successes: Organizational Structure, Incentives, and Complementarities
Cochrane w8066 The Risk and Return of Venture Capital
Da Rin and Fabiana Penas w13636 The Effect of Venture Capital on Innovation Strategies
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us