Return to Venture Capital in the Aggregate

72 Pages Posted: 20 Apr 2022

See all articles by Ravi Jagannathan

Ravi Jagannathan

Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER); Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF); Indian School of Business (ISB), Hyderabad

Shumiao Ouyang

University of Oxford, Saïd Business School

Jiaheng Yu

The University of Hong Kong - Faculty of Business and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 13, 2022

Abstract

We measure the aggregate return to all equity investors in various funding rounds of a venture company with the founders' investments valued at their first-round pre-money valuations. We examine 17,242 ventures that had their first funding rounds during 1980 and 2006 and follow them till their exits or 2018 whichever is earlier. Our measure, unlike round to round and round to exit return measures, does not require valuation information for interim funding rounds, which are mostly missing.The potentially large bias in reported post money valuations pointed out by Gornall and Strebulaev (2020) does not affect our return measure.

Keywords: Venture Investment Returns, Public Market Equivalent

JEL Classification: G11, G24

Suggested Citation

Jagannathan, Ravi and Ouyang, Shumiao and Yu, Jiaheng, Return to Venture Capital in the Aggregate (April 13, 2022). Available at SSRN: https://ssrn.com/abstract=4083525 or http://dx.doi.org/10.2139/ssrn.4083525

Ravi Jagannathan (Contact Author)

Northwestern University - Kellogg School of Management ( email )

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Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF) ( email )

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Indian School of Business (ISB), Hyderabad ( email )

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Shumiao Ouyang

University of Oxford, Saïd Business School ( email )

HOME PAGE: http://https://www.shumiaoouyang.com/

Jiaheng Yu

The University of Hong Kong - Faculty of Business and Economics ( email )

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Hong Kong
China

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