Cost of experimentation and the evolution of venture capital

Ewens, Michael; Nanda, Ramana; Rhodes‐Kropf, Matthew

doi:10.1016/j.jfineco.2018.03.001

Cited by 212 publications

(73 citation statements)

References 28 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Second, the results are robust when evaluating subsamples of the data that exclude or include only certain types of IPOs, such as VC-backed IPOs. In particular, the results are qualitatively similar when we exclude firms in "cloud industries," which are industries, such as software, that heavily rely on cloud computing technology for data management (Ewens, Nanda, and Rhodes-Kropf, 2018). Thus, our findings are not limited to software firms such as Facebook and Snap.…”

Section: Introductionsupporting

confidence: 54%

The Rise of Dual-Class Stock IPOs

et al. 2020

View full text Add to dashboard Cite

show abstract

Section: Introductionsupporting

confidence: 54%

The Rise of Dual-Class Stock IPOs

et al. 2020

View full text Add to dashboard Cite

show abstract

“…There are reasons to expect the information value of a patent to be different in these two industries. 36 IT startups tend to be founded by younger entrepreneurs (Ewens, Nanda, and Rhodes-Kropf (2018)) and their inventions often face substantial demand uncertainty and imitation risk. Thus, a favorable decision on an IT startup's first patent application can provide a particularly valuable early signal about the quality of its technology and its founders, while also allowing the founders to discuss their idea with VCs without fear of expropriation.…”

Section: Variation Across Industriesmentioning

confidence: 99%

What Is a Patent Worth? Evidence from the U.S. Patent “Lottery”

Farre-Mensa¹,

Hegde²,

Ljungqvist

2019

The Journal of Finance

174

View full text Add to dashboard Cite

We provide evidence on the value of patents to startups by leveraging the quasi‐random assignment of applications to examiners with different propensities to grant patents. Using unique data on all first‐time applications filed at the U.S. Patent Office since 2001, we find that startups that win the patent “lottery” by drawing lenient examiners have, on average, 55% higher employment growth and 80% higher sales growth five years later. Patent winners also pursue more, and higher quality, follow‐on innovation. Winning a first patent boosts a startup’s subsequent growth and innovation by facilitating access to funding from venture capitalists, banks, and public investors.

show abstract

“…Recent interest in 'unicorn' businesses has only exacerbated the desire to allocate huge investment bids totalling hundreds of millions of dollars over multiple funding rounds to single companies deemed to have a 'disruptive' global model. However, this may not prevent some VC firms initially investing small sums in a large number of potential businesses 25 in order to increase both market intelligence and opportunity (Ewens et al, 2018).…”

Section: The State As 'Apologist'mentioning

confidence: 99%

Ten Meditations on (Public) Venture Capital – Revisited

Murray

2020

SSRN Journal

View full text Add to dashboard Cite

This paper reflects on the policy formation process in the burgeoning area of government's involvement venture capital finance (VC) over the two decades 2000-2020. It looks at both why and how government VC funds (GVC) have evolved. The increasingly common vehicle of 'hybrid' co-investment funds, which include both public and private VC investors managed by a jointly approved private fund manager, is analysed. The evolution and greater refinement of public intervention in VC markets over time is acknowledged while noting that significant operational challenges remain. There is some evidence that later iterations of GVC programmes have started to add net value which may imply a public-policy learning process. A fluctuating supply over time for venture capital finance, particularly at the earliest stages of firm formation and growth, suggests the benefits of well-designed and complementary government venture capital activity. The rubric of Ten Meditations is employed as a device to communicate both problem and prescription across the academic/policy maker divide. The paper is intended to be relevant to policy makers while grounded in robust academic research. 1 See page 8 2 The state played a major role in the encouragement of BA activity via financial support for BA networks as well as offering BA investors a range of tax breaks on early-stage investments (Nightingale et al, 2009). 3 In the last five years, the arrival of 'equity crowdfunding' could also be seen as a third response to rationing of the supply of classic venture capital (Hornuf and Schweinbacher, 2014; Collins and Pierrakis, 2012).

show abstract

Cost of experimentation and the evolution of venture capital

Cited by 212 publications

References 28 publications

The Rise of Dual-Class Stock IPOs

The Rise of Dual-Class Stock IPOs

What Is a Patent Worth? Evidence from the U.S. Patent “Lottery”

Ten Meditations on (Public) Venture Capital – Revisited

Contact Info

Product

Resources

About