On the Lifecycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms
Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative
Federal Reserve Board
April 19, 2012
Journal of Finance, Forthcoming
We use U.S. Census data over twenty-five years to understand the lifecycle dynamics of VC- and non-VC-financed firms. We find both successful and failed VC-financed firms achieve larger scale but are not more profitable at exit than matched non-VC-financed firms. Cumulative failure rates of VC-financed firms are lower, with the difference being driven largely by lower failure rates in the initial years after receiving VC. Our results are not driven by VCs disguising failures as acquisitions or by certain types of VCs. Finally, the performance difference between VC- and non-VC-financed firms narrows in the post-internet bubble years, but does not disappear.
Number of Pages in PDF File: 66
Date posted: July 15, 2011 ; Last revised: October 29, 2014