Venture capitalists and the decision to go public

Lerner, Joshua

doi:10.1016/0304-405x(94)90035-3

Cited by 807 publications

(410 citation statements)

References 19 publications

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“…Lerner (1994) shows that VCs try to optimize their exit timing. They go public when equity valuations are high and employ private financings when values are lower.…”

Section: Abilities and Strengthsmentioning

confidence: 99%

Who are the True Venture Capitalists in Germany?

Tykvova

2004

SSRN Journal

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Die Discussion Papers dienen einer möglichst schnellen Verbreitung von neueren Forschungsarbeiten des ZEW. Die Beiträge liegen in alleiniger Verantwortung der Autoren und stellen nicht notwendigerweise die Meinung des ZEW dar.Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp0416.pdf Non-technical SummaryIn this paper, we analyze the heterogeneity of the venture capital market. Concretely, we investigate whether the governance structures, objectives, abilities and track records of different types of venture capitalists (bank-dependent, corporate, public and independent) have an influence on their investment and divestment patterns. A natural playing field for this analysis is the German venture capital market with its wide variety of venture capitalists' types. In contrast to the US, where venture capital funds typically are independent entities, bankdependent and public venture capitalists have a large market share in Germany. The study is based on a unique hand-collected database of all venture-backed initial public offerings (IPOs) on Germany's Neuer Markt.We find that significant differences among the different types of venture capitalists exist. The behavior of independent and corporate venture capitalists is more similar to that of their US counterparts whereas bank-dependent and public venture capital funds typically are bridge investors rather than true venture capitalists. Independent and corporate venture capitalists usually take larger equity positions, syndicate more, use more often stage financing, invest at earlier stages, finance their companies for longer periods of time and are able to better manage the IPO timing. We explain this behavior by different capabilities and experience on the one hand as well as differing aims on the other hand. Thus, it seems that the joint provision of capital and managerial support, which is a characteristic of venture capital financing, is offered by independent and corporate venture capitalists rather than by public and bank-dependent funds.Who Are the True Venture Capitalists in Germany?

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“…Lerner (1994) shows that VCs try to optimize their exit timing. They go public when equity valuations are high and employ private financings when values are lower.…”

Section: Abilities and Strengthsmentioning

confidence: 99%

Who are the True Venture Capitalists in Germany?

Tykvova

2004

SSRN Journal

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“…Previous research has tended to focus on the IPO as an exit route (Lerner, 1994;Murray, 1994;Barry et al, 1990;Giot and Schwienbacher, 2007). However, IPOs are relatively uncommon, with the vast majority of private equity exits being trade or secondary sales.…”

Section: Introductionmentioning

confidence: 99%

What determines the exit decision for leveraged buyouts?

Jenkinson¹,

Sousa²

2015

Journal of Banking & Finance

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a b s t r a c tHow and when to exit portfolio company investments are critical choices facing private equity funds. In this paper we analyze 1022 European private equity exits, using information on fund and portfolio company characteristics, and on conditions in capital markets. For over 43% of the exits, private equity funds sold to each other and we analyze why such secondary buyouts have gained in popularity relative to IPOs and sales to corporate acquirers. We find that the exit route depends on various portfolio company characteristics, and that conditions in the debt and equity markets have a strong influence on exit choice. The existing literature has tended to portray the IPO is the ''preferred'' exit route. However, our analysis suggests this is mistaken: private equity funds take advantage of 'windows of opportunity', and the exit route that maximizes value varies with market conditions.

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“…It specializes in financing and nurturing companies at an early stage of development ('start-ups') that operate in high-tech industries. For these companies the expertise of the venture capitalist, its knowledge of markets and of the entrepreneurial process, and its network of contacts are most useful to help unfold their growth potential (Bottazzi, Da Rin and Hellmann (2005a), Gompers (1995), Hellmann and Puri (2002), and Lerner (1994Lerner ( , 1995). By contrast, when venture capital is applied to companies at a later stage of their growth, or in companies which operate in technologically mature industries, it has less of an opportunity to 'make a difference' (Michelacci and Suarez (2004)).…”

Section: Introductionmentioning

confidence: 99%

Public policy and the creation of active venture capital markets

Rin¹,

Nicodano²,

Sembenelli³

2006

Journal of Public Economics

306

180

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We assess the effectiveness of different public policy instruments for the creation of active venture capital markets. Our methodology focusses on 'innovation ratios,' defined to be the shares of high-tech, and of early stage, venture capital investments. We study a unique panel of data for 14 European countries between 1988 and 2001. We have several novel findings. First, we find no evidence of a shortage of supply of venture capital funds in Europe, a result which questions the effectiveness of the most widely used policy for fostering active venture capital markets. We also find other policies to be effective. In particular, the opening of stock markets targeted at entrepreneurial companies has a positive, large effect on the innovation ratios. Reductions in the corporate capital gains tax rate increase the share of both high-tech and early stage investment. A reduction in labor regulation also results in a higher share of high-tech investments. Finally, we find no evidence of an effect of increased public R&D spending on the innovation ratios.

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Venture capitalists and the decision to go public

Cited by 807 publications

References 19 publications

Who are the True Venture Capitalists in Germany?

Who are the True Venture Capitalists in Germany?

What determines the exit decision for leveraged buyouts?

Public policy and the creation of active venture capital markets

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