Do Venture Capital Investors Learn from Public Markets?

53 Pages Posted: 19 May 2016 Last revised: 12 Jun 2018

See all articles by Bibo Liu

Bibo Liu

Tsinghua University

Xuan Tian

Tsinghua University - PBC School of Finance

Date Written: June 1, 2018


We examine whether venture capital (VC) investors learn information contained in public market stock prices. VCs are less likely to stage finance startups and syndicate with other VCs when stock prices are more informative. An instrumental variable approach suggests the relation is likely causal. IPO prospects of their startups are the information contained in prices learnt by VCs. VCs’ learning from the public market positively affects their overall investment and performance. Our paper sheds new light on the real effects of financial markets and suggests the allocative role of security prices is much broader than what we have already thought.

Keywords: Learning; Venture capital; Staging; Syndication; Price informativeness

JEL Classification: G24, G18, G14

Suggested Citation

Liu, Bibo and Tian, Xuan, Do Venture Capital Investors Learn from Public Markets? (June 1, 2018). Available at SSRN: or

Bibo Liu

Tsinghua University ( email )

Beijing, Beijing 100083
86-10-62795701 (Phone)

Xuan Tian (Contact Author)

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
+86-10-62794103 (Phone)


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