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How Well do Venture Capital Databases Reflect Actual Investments?

30 Pages Posted: 22 Oct 2006  

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Per Strömberg

Swedish House of Finance

Berk A. Sensoy

Vanderbilt University - Finance

Date Written: September 2002

Abstract

Researchers increasingly have used the two primary venture capital databases - VentureOne and Venture Economics - to study venture capital (VC) financings. These data are largely self-reported. In this paper, we compare the actual contracts in 143 VC financings to their characterizations in the databases. The databases exclude roughly 15% of the financing rounds. The Venture Economics database oversamples larger rounds and California companies while the financing rounds included in the VentureOne database exhibit no significant bias. The databases provide unbiased, but noisy measures of financing amounts and their valuations. The databases also are less successful in measuring milestone rounds. The VentureOne database oversamples valuations for highly valued firms even controlling for firm characteristics. We discuss the implications of these findings for researchers and practitioners.

Keywords: venture capital, databases, investments

JEL Classification: G24

Suggested Citation

Kaplan, Steven N. and Strömberg, Per and Sensoy, Berk A., How Well do Venture Capital Databases Reflect Actual Investments? (September 2002). Available at SSRN: https://ssrn.com/abstract=939073 or http://dx.doi.org/10.2139/ssrn.939073

Steven Neil Kaplan (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-4513 (Phone)
773-702-0458 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Per Stromberg

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Berk A. Sensoy

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

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