TY  - JOUR
AU  - Gompers,Paul
AU  - Kovner,Anna
AU  - Lerner,Josh
AU  - Scharfstein,David
TI  - Venture Capital Investment Cycles: The Impact of Public Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11385
PY  - 2005
Y2  - May 2005
UR  - http://www.nber.org/papers/w11385
L1  - http://www.nber.org/papers/w11385.pdf
N1  - Author contact info:
Paul Gompers
Harvard Business School
Baker Library 263
Soldiers Field
Boston, MA 02163
Tel: 617/495-6297
Fax: 617/496-8443
E-Mail: pgompers@hbs.edu

Anna Kovner
Financial Intermediation Function
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
E-Mail: Anna.Kovner@ny.frb.org

Josh Lerner
Harvard Business School
Rock Center 214
Boston, MA 02163
Tel: 617/495-6065
Fax: 617/496-7357
E-Mail: jlerner@hbs.edu

David S. Scharfstein
Harvard Business School
Baker 239
Soldiers Field
Boston, MA 02163
Tel: 617/496-5067
Fax: 617/496-8443
E-Mail: dscharfstein@hbs.edu
AB  - 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.
ER  -