44 Pages Posted: 20 Feb 2008 Last revised: 8 Apr 2012
Date Written: September 18, 2009
This paper examines how public market information relates to the initiation of venture capital projects. Analysis of venture capital investments in the U.S. between 1980 and 2007 indicates that venture capitalists tend to defer new investment projects in target industries with substantial market volatility. This delay effect of market volatility is reduced if the target industry experiences high sales growth or if competition among venture capitalists is intense in the target industry. The paper provides further evidence to corroborate the view that venture capitalists rationally respond to market shifts in their investment decisions.
Keywords: Venture capital, real options, investment timing, uncertainty, growth, and competition
JEL Classification: G24, M13
Suggested Citation: Suggested Citation
Li, Yong and Mahoney, Joseph T., When Are Venture Capital Projects Initiated? (September 18, 2009). Journal of Business Venturing, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1095322