How Well do Venture Capital Databases Reflect Actual Investments?
30 Pages
Posted: 22 Oct 2006
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
Swedish House of Finance
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:
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
