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Venture Capital (venture + capital)
Terms modified by Venture Capital Selected AbstractsIt Ain't Broke: The Past, Present, and Future of Venture CapitalJOURNAL OF APPLIED CORPORATE FINANCE, Issue 2 2010Steven N. Kaplan This article presents a selective history of the U.S. venture capital (VC) industry, a discussion of the current state of the market, and some predictions about where the market is going. There is no doubt that the U.S. venture capital industry has been very successful. The VC model has provided an efficient solution to a difficult problem,that of enabling people with promising ideas but often limited track records to raise capital from outside investors. A large fraction of IPOs, including many of the most successful, have been funded by venture capitalists, and the U.S. VC model has been copied around the world. Armed with this historical perspective, the authors view with skepticism the recent claims that the VC model is broken. In the past, VC investments in companies have represented a remarkably constant 0.15% of the total value of the stock market; and commitments to VC funds, while more variable, have been consistently in the 0.10% to 0.20% range. Both of these percentages have continued to hold in recent years. And despite the relatively low number of IPOs, the returns to VC funds this decade have largely maintained their historical relationship to the overall stock market. To be sure, VC investment and returns continue to be subject to boom-and-bust cycles. But if the recent period has most of the features of a bust, the authors view today's historically low level of commitments to U.S. VC funds as a fairly reliable indicator of relatively high expected returns for the 2009 and (probably) 2010 vintage years. Perhaps the most promising future role for venture capital, as the authors suggest in closing, is to increase the productivity of the corporate research and development function through various kinds of partnerships and outsourcing arrangements. [source] Post-IPO Operating Performance, Venture Capital and the Bubble YearsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2007Jerry Coakley Abstract:, We analyse the post-issue operating performance of 316 venture-backed and 274 non-venture UK IPOs 1985,2003. The finding of a statistically significant five-year, operational decline exhibited over the full sample period is not robust. Rather it is driven by the dramatic underperformance during the 1998,2000 bubble years while IPOs perform normally in the remaining years. Cross-section regression results indicate support for venture capital certification in the non-bubble years but a significantly negative relationship between operating performance and venture capitalist board representation during the bubble years. The bubble year underperformance is explained by market timing and by low quality companies taking advantage of investor sentiment. [source] Der Markt für Venture Capital: Anreizprobleme, Governance Strukturen und staatliche InterventionenPERSPEKTIVEN DER WIRTSCHAFTSPOLITIK, Issue 3 2002Georg Gebhardt In this paper we give an overview, with special emphasis on Germany, of the recent development of the market for venture capital. We analyse the financial contracting problems that arise when entrepreneurs need capital from outside investors, and demonstrate how these problems are addressed by the institutions and contracts observed in the market for venture capital. Finally, we discuss the arguments in favour of government subsidies for private R&D, and argue that there are positive incentive effects if these subsidies are given to venture capital financed projects, rather than to established firms. [source] The Geography of the Internet Industry: Venture Capital, Dot-coms, and Local KnowledgeTHE CANADIAN GEOGRAPHER/LE GEOGRAPHE CANADIEN, Issue 3 2007ROBERT RAMSEY No abstract is available for this article. [source] International venture capital research: From cross-country comparisons to crossing bordersINTERNATIONAL JOURNAL OF MANAGEMENT REVIEWS, Issue 3 2005Mike Wright Venture capital (VC) has become an international phenomenon, and VC firms are a specific kind of service firm whose characteristics have distinctive implications for international behaviour. There is now a disparate body of research on international aspects of VC across a number of disciplines comprising finance, economics, strategy, entrepreneurship, international business and economic geography. A novel aspect of this paper is that we review and synthesize this disparate literature. A number of research gaps and limitations in the theoretical and methodological approaches involved in previous studies are identified and suggestions made for further research. We show that the vast majority of the literature relates to cross-country comparisons; that is, macro-level comparisons of VC industries across different countries and micro-level comparisons of VC behaviour across countries. From our review of the literature, we argue that an under-researched area concerns the influence of institutional contexts, especially the role of social networks and cultures. Furthermore, our review of the literature indicates that there is a major research gap in relation to work dealing with the crossing of country borders by VC firms. We suggest that resource-based, capabilities, institutional and network theories may be offer insights to further our understanding of the behaviour of VC firms in this area. [source] Genetically Engineered: Why Some Venture Capital Firms Are More Successful Than OthersENTREPRENEURSHIP THEORY AND PRACTICE, Issue 1 2009Jennifer M. Walske While venture capital has received a tremendous amount of attention, prior research has predominantly looked at venture capital firms (VCFs) post raising their first fund. In this paper, we move the point of analysis back further and ask what type of founding team experience best predicts VCF success, controlling for firm strategy, firm size, and the environment upon which the firm was born. Empirical results show that venture capital, senior management, and consulting experience aids VCF success, while entrepreneurial experience impedes it. None of the control variables affect a VCF's ability to raise subsequent funds. [source] The Effect of Venture Capital Financing on the Sensitivity to Cash Flow of Firm's InvestmentsEUROPEAN FINANCIAL MANAGEMENT, Issue 4 2010Fabio Bertoni G32; D92; G23 Abstract This work studies the effect of venture capital (VC) financing on firms' investments in a longitudinal sample of 379 Italian unlisted new-technology-based firms (NTBFs) observed over the 10-year period from 1994 to 2003. We distinguish the effects of VC financing according to the type of investor: independent VC (IVC) funds and corporate VC (CVC) investors. Previous studies argue that NTBFs are the firms most likely to be financially constrained. The technology-intensive nature of their activity and their lack of a track record increase adverse selection and moral hazard problems. Moreover, most of their assets are firm-specific or intangible and hence cannot be pledged as collateral. In accordance with this view, we show that the investment rate of NTBFs is strongly positively correlated with their current cash flows. We also find that after receiving VC financing, NTBFs increase their investment rate independently of the type of VC investor. However, the investments of CVC-backed firms remain sensitive to shocks in cash flows, whereas IVC-backed firms exhibit a low and statistically not significant investment,cash flow sensitivity that we interpret as a signal of the removal of financial constraints. [source] How States Augment the Capabilities of Technology,Pioneering FirmsGROWTH AND CHANGE, Issue 2 2002Maryann P. Feldman State governments offer a variety of programs to assist technology intensive entrepreneurial firms yet there is a limited understanding of how firms use these programs. This paper provides a framework for categorizing state technology programs and uses detailed case studies to examine how these programs augment firms' capabilities. It is concluded that firms made extensive use of state programs that provide access to university intellectual property and research facilities. In addition, firms participated in programs that provided incentives for faculty to conduct joint research with industry. Finally, state venture capital programs, though small relative to federal R&D grants or venture capital, appear to nurture firms' development. [source] Venture capitalists and entrepreneurs become venture philanthropistsINTERNATIONAL JOURNAL OF NONPROFIT & VOLUNTARY SECTOR MARKETING, Issue 3 2005John PepinArticle first published online: 19 AUG 200 Non-traditional charitable sources of revenue may be categorised as follows: Venture philanthropy: Human resources and funding invested as donation in the charity by entrepreneurs, venture capitalists, trusts and corporations in search of a social return on their investment. It involves high engagement over many years with fixed milestones and tangible returns and exit achieved by developing alternative, sustainable income. Commercial ventures: They seek a financial return on investment by creating a social enterprise operated by charities and their trading/holding companies alone or in partnership with the corporate sector, venture capitalists or investors to provide funding. Venture philanthropists may also ,invest' without establishing an equity position in the commercial enterprise. Any profits are re-directed to mission-related activity, although the business activity may or may not be mission related. Social venture capital: It funds commercial ventures (as above) but may not seek a complete return on investment; instead the investor may off set some or all of the investment against social outcomes. Within the context of venture philanthropy, this paper demonstrates how charities, venture capitalists and entrepreneurs may work together in strategic alliances. It explores venture philanthropy from the perspective of venture capitalists and entrepreneurs, giving examples. Charities are shown how to prepare themselves to take advantage of these entrepreneurial opportunities. Although the emphasis in this paper is on venture philanthropy, the processes outlined may be used to help a charity take advantage of opportunities within the broader social entrepreneurial context. Successful venture capitalists and entrepreneurs have demonstrated the ability to turn outline business ideas into big results, frequently in highly competitive business environments. A common characteristic that appears to unite these individuals when they divert their interest toward social ventures is a desire to apply their business-like approach, which includes planning processes, milestones and outcome measurement to their social venture activity. Copyright © 2005 John Wiley & Sons, Ltd. [source] The Role of Private Equity in Life SciencesJOURNAL OF APPLIED CORPORATE FINANCE, Issue 2 2010Jeff Greene In a roundtable published in this journal a year ago, there was a clear consensus that the R&D function in big pharma was inefficient and in need of major restructuring, possibly through increased investments by venture capital and private equity firms. In this discussion, an accomplished group of industry practitioners begins by looking at the prospects for both venture capital and private equity to play meaningful roles in financing early- and mid-stage drug development. In so doing, they explore questions like the following: , Are there ways for big pharma and biotech to reduce "science risk" and make R&D funding more profitable and attractive to venture capital and private equity,and perhaps even hedge funds? , What roles do you see for specialty PE firms like Symphony Capital and Paul Capital, which are now bundling mid-stage development assets and securitizing royalties? Then the panelists turn to the broader life sciences industry and consider the outlook for leveraged private equity transactions involving marketed products, late-stage development, and services. Here they consider issues like the following: , Will PE be attracted to less-R&D-intensive activities like medtech and generics? , Have the recent consolidation through mergers and reorganization of big pharma into decentralized business units created opportunities for carve-outs of certain businesses? For big pharma and life sciences companies in general, the answers to such questions point to greater specialization and focus achieved partly through strategic alliances with venture capital, private equity, and even hedge funds, and involving marketed products and services as well as early-stage drug development. [source] It Ain't Broke: The Past, Present, and Future of Venture CapitalJOURNAL OF APPLIED CORPORATE FINANCE, Issue 2 2010Steven N. Kaplan This article presents a selective history of the U.S. venture capital (VC) industry, a discussion of the current state of the market, and some predictions about where the market is going. There is no doubt that the U.S. venture capital industry has been very successful. The VC model has provided an efficient solution to a difficult problem,that of enabling people with promising ideas but often limited track records to raise capital from outside investors. A large fraction of IPOs, including many of the most successful, have been funded by venture capitalists, and the U.S. VC model has been copied around the world. Armed with this historical perspective, the authors view with skepticism the recent claims that the VC model is broken. In the past, VC investments in companies have represented a remarkably constant 0.15% of the total value of the stock market; and commitments to VC funds, while more variable, have been consistently in the 0.10% to 0.20% range. Both of these percentages have continued to hold in recent years. And despite the relatively low number of IPOs, the returns to VC funds this decade have largely maintained their historical relationship to the overall stock market. To be sure, VC investment and returns continue to be subject to boom-and-bust cycles. But if the recent period has most of the features of a bust, the authors view today's historically low level of commitments to U.S. VC funds as a fairly reliable indicator of relatively high expected returns for the 2009 and (probably) 2010 vintage years. Perhaps the most promising future role for venture capital, as the authors suggest in closing, is to increase the productivity of the corporate research and development function through various kinds of partnerships and outsourcing arrangements. [source] Life Sciences Roundtable: Strategy and FinancingJOURNAL OF APPLIED CORPORATE FINANCE, Issue 2 2009Judy Lewent In light of the challenges facing the pharmaceutical industry, a distinguished group of pharma executives and strategic and financial advisers discusses the following corporate decisions: Strategy: What business model is most likely to maximize long-term shareholder value? For example, is diversification by big pharma into areas like consumer healthcare and generics a reliable way to create sustainable value? Capital allocation: What are the best methods for evaluating investments in pharma R&D, and for deciding which programs should be terminated and which assets divested? If conventional DCF isn't much help in a world where R&D outcomes are so uncertain, what about proposed models like real options? Corporate governance and incentive systems: Should big pharma continue to outsource ever more of its R&D functions to biotech and venture capital? Or can it overcome the problems associated with size by creating more decentralized business units and trying to replicate the accountability and incentives of smaller biotech firms? Capital structure and payout policy: Are the large cash and equity positions and minimal payouts of big pharma, typically justified as cushioning the uncertainties associated with pharma R&D, likely to be the value-maximizing capital structure in the future? With many biotechs struggling and venture capital scarce, where are the new sources of capital for the industry? And can future deals be structured in ways that help bring about higher returns for big pharma as well as the R&D providers? Disclosure: What should management tell investors to help ensure that their companies' policies and promising investments are reflected in their stock prices? [source] A Property Rights Perspective on Venture Capital Investment DecisionsJOURNAL OF MANAGEMENT STUDIES, Issue 7 2010Dimo Dimov abstract To understand how ownership differences influence specific types of strategic decisions, we examine the investment decisions of venture capital (VC) firms, for which a variety of property rights arrangements exist. We describe how VC firms are characterized by important differences in how and to whom various property rights are allocated. On this basis, we develop a series of hypotheses regarding differences in the range and types of investment opportunities pursued by private, corporate, and bank affiliated VC firms. Evaluating our hypotheses using data on investments carried out by 3557 firms, we find that these types of firm perform distinct roles in the ecology of VC financing. [source] Venture Capital Availability and Labor Market Performance in Industrial Countries: Evidence Based on Survey DataKYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 1 2010Horst Feldmann SUMMARY This paper finds that more readily available venture capital is likely to have lowered unemployment rates and raised employment rates in industrial countries over the period 1982 to 2003. More readily available venture capital is also likely to have lowered the share of long-term unemployed in the total number of unemployed. The magnitude of the effects appears to have been substantial. To measure access to venture capital, we use answers from surveys of senior business executives. We also employ a large number of control variables. Our regression results are robust to variations in specification and sample size. [source] ICT Innovation and Economic Performance: The Role of Financial IntermediationKYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 4 2002Aerdt Houben This article considers the relationship between finance and the contribution of Information and Communication Technologies (ICT) to macroeconomic performance. The general characteristics of ICT firms, especially their often ,high risk, high return' nature, suggest equity finance is more appropriate than debt finance. Also, the prevalence of information asymmetries tends to favour internal finance and venture capital with management participation. For a group of countries, we analyse correlations between financial structure and the ICT contribution to economic growth. Our results support the view that a market,oriented financial system and a well,developed venture capital market are key factors stimulating the emergence of the so,called ,New Economy'. This helps explain the considerable gap in productivity growth between the United States and Europe in the second half of the 1990s. [source] Der Markt für Venture Capital: Anreizprobleme, Governance Strukturen und staatliche InterventionenPERSPEKTIVEN DER WIRTSCHAFTSPOLITIK, Issue 3 2002Georg Gebhardt In this paper we give an overview, with special emphasis on Germany, of the recent development of the market for venture capital. We analyse the financial contracting problems that arise when entrepreneurs need capital from outside investors, and demonstrate how these problems are addressed by the institutions and contracts observed in the market for venture capital. Finally, we discuss the arguments in favour of government subsidies for private R&D, and argue that there are positive incentive effects if these subsidies are given to venture capital financed projects, rather than to established firms. [source] The voice of venture capitalBUSINESS STRATEGY REVIEW, Issue 4 2006Peter Linthwaite First page of article [source] |