Liquidity, Technological Opportunities and the Stage Distribution of Venture Capital Investments

Lahr, H., Mina, A. (2014). Liquidity, Technological Opportunities, and the Stage Distribution of Venture Capital Investments. Financial Management 43 (2), 291–325, DOI: 10.1111/fima.12048

48 Pages Posted: 9 Feb 2017

See all articles by Henry Lahr

Henry Lahr

The Open University - Business School; University of Cambridge - Centre for Business Research (CBR)

Andrea Mina

Scuola Superiore Sant'Anna; Centre for Business Research, Cambridge Judge Business School, University of Cambridge

Date Written: August 27, 2013

Abstract

This paper explores the determinants of the stage distribution of European venture capital investments from 1990 to 2011. Consistent with liquidity risk theory, we show that the likelihood of investing in earlier stages increases relative to all private equity investments during liquidity crisis years. While liquidity is the main driver of acquisition investments and to some extent of expansion financings, technological opportunities are overall the main driver of early and late stage venture capital investments. In contrast to the dotcom crash, the recent financial crisis negatively affected the relative likelihood of expansion investments, but not of early and late stage investments.

Keywords: Venture capital, liquidity risk, technological opportunities, financial crisis

JEL Classification: G24, O16, O52, F30

Suggested Citation

Lahr, Henry and Mina, Andrea, Liquidity, Technological Opportunities and the Stage Distribution of Venture Capital Investments (August 27, 2013). Lahr, H., Mina, A. (2014). Liquidity, Technological Opportunities, and the Stage Distribution of Venture Capital Investments. Financial Management 43 (2), 291–325, DOI: 10.1111/fima.12048, Available at SSRN: https://ssrn.com/abstract=2914399

Henry Lahr (Contact Author)

The Open University - Business School ( email )

Milton Keynes, MK6 7AA
United Kingdom

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom

HOME PAGE: http://www.cbr.cam.ac.uk

Andrea Mina

Scuola Superiore Sant'Anna ( email )

Piazza Martiri delle LIbertà 33
Pisa, Pisa 56127
Italy

HOME PAGE: http://https://www.santannapisa.it/it/andrea-mina

Centre for Business Research, Cambridge Judge Business School, University of Cambridge ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

HOME PAGE: http://https://www.cbr.cam.ac.uk/people/the-team/andrea-mina/

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