On the Lifecycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms

66 Pages Posted: 15 Jul 2011 Last revised: 29 Oct 2014

Manju Puri

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Rebecca Zarutskie

Federal Reserve Board

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Date Written: April 19, 2012

Abstract

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.

Suggested Citation

Puri, Manju and Zarutskie, Rebecca, On the Lifecycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms (April 19, 2012). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1885790

Manju Puri

Duke University - Fuqua School of Business ( email )

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National Bureau of Economic Research (NBER)

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Duke Innovation & Entrepreneurship Initiative

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Rebecca Zarutskie (Contact Author)

Federal Reserve Board ( email )

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