Searching for Ghosts: Business Survival, Unmeasured Entrepreneurial Activity and Private Equity Investment in the Dot-Com Era

Abstract:     
A novel database of business planning documents that closely approximates the population of Dot-Com entrepreneurs is introduced and used to compile three estimates: 1) the survival rate of dot-com startups, which we find is 48%; 2) the number of dot-com startups from 1998-2002, which we find to be on the order of 50,000 firms; and 3) the amount of private equity invested in the Dot-Com Era, which we find exceeds reported funding by as much as 18%. The estimates offer the first detailed characterization of the population of firms that supplied the venture capital and IPO markets during the Dot-Com Era. We conclude that the Dot-Com Era, broadly considered, was a legitimate response to a technology shock.

Number of Pages in PDF File: 60

Keywords: Venture finance, angel investing, dot-com era, speculative bubbles, entrepreneurship, industry evolution, survival

JEL Classification: G24, L10, L89, M14, N00

working papers series