Choosing between Promising and Crowded Industries: How Does the Venture Capital Industry Fare in Each?

Abstract

Incredible profits from Initial Public Offerings have been highly emphasized. This paper refutes these profits as being standard and supports the market's return to normalcy by stratifying annual and cumulative returns for different industries: Biotechnology; Communications; Computer Related companies; Medical, Health and Life Science industries; Non-High-Technology companies; and Semiconductor and Other Electronics Industries. This paper tests whether an entrepreneur has greater potential for success in continually promising fields or whether one should slug it out in a risky but potentially very rewarding industry. A comparison of success is made between already competitive businesses and those, which are young and growing.

Keywords: Initial public offering, venture capital, annualized and cumulative rates of return, Information Technology, Medical, Health and Life Science, Non-High Technology, Biotechnology, Communications, Computer Industry, Semiconductor and Other Electronics Industries

JEL Classification: C12, D81, D92, E22, G12, G24, G3, M13, M21, O16