Prior CEO Experience as a Predictor of Entrepreneurial IPO Success: An Analysis of VC Investment Performance

Abstract

With increasing low returns on funds, Venture Capital (VC) firms search for the holy grail of success criteria to assess entrepreneur ventures. This study investigates Initial Public Offerings (IPOs) listed on the London Stock Exchange (LSE) in the AIM market between the years 2010 and 2019, within 10 years of being founded. Findings show a large proportion of the IPOs (65%) had founders with prior CEO experience and raised more money on average (£21.90m compared to £13.28m). Hence, an implication for the VC industry for investments is that entrepreneurs with previous CEO experience will likely raise more money at IPO.

Keywords: Entrepreneur, CEO, IPO, Venture Capital,Success, VC, Private Equity

JEL Classification: G24, G32