Post-Investment Migration of Canadian Venture Capital-Backed New Technology-Based Firms

Carpentier, Cécile; Suret, Jean‐Marc

doi:10.2139/ssrn.2444976

Cited by 5 publications

(8 citation statements)

References 24 publications

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“…Central to the VC investment model is the need for successful exits to realize financial returns for funds and their investors which typically occurs through acquisition by a larger company. While patchy, empirical evidence suggests that acquisition of young growing companies can adversely affect regional economic development in the longer term (Carpentier & Suret, ; Foreman‐Peck & Nicholls, ; Xiao, ). Moreover, small exits are unlikely to generate significant wealth for shareholders and investors, thereby limiting the potential for entrepreneurial recycling (Mason & Harrison, ).…”

Section: Addressing the Critique Of Government Vc—developing An Ecosymentioning

confidence: 99%

Emerging trends in government venture capital policies in smaller peripheral economies: Lessons from Finland, New Zealand, and Estonia

Owen

Mason

2019

Strategic Change

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Emerging trends from the developing venture capital industries of three smaller peripheral economies (Finland, New Zealand, and Estonia), demonstrate that government policy can overcome scale and distance barriers to assist in establishing venture capital to support innovative potential high growth ventures. Eight common policy themes for successful venture capital development are: new venture stimulation; dedicated finance policy institutions; stable, internationally harmonized tax and regulations; business angel development; inward investment; international venture capital fund development; smooth pipeline of investment; effective investment exit market. Venture capital policy development themes are interconnected, requiring a holistic ecosystem approach. A blueprint for successful small peripheral economy venture capital development requires an initial phase of new venture demand stimulation and ensuing simultaneity of policies to engineer venture capital development. This paper presents a unique insight into government strategies to develop VC in three SPEs-Finland, New Zealand, and Estonia. It demonstrates emerging trends for what is working well or less well at different stages of the national VC development (Avnimelech, Kenney, & Teubal, 2005;Avnimelech & Teubal, 2006). This contemporary review and critique of government VC policy provides a theoretical VC ecosystem development framework for the study. The paper then discusses the lessons learned from the three SPEs and presents a blueprint for SPE governments to develop more cohesive and comprehensive ecosystem for sustainable VC.

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Section: Addressing the Critique Of Government Vc—developing An Ecosymentioning

confidence: 99%

Emerging trends in government venture capital policies in smaller peripheral economies: Lessons from Finland, New Zealand, and Estonia

Owen

Mason

2019

Strategic Change

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“…In Canada, IPOs have decreased sharply since the early 1990s (Magnan and Campbell, ; Tingle, Pandes, and Robinson, ); this is particularly alarming because of the decline in the number of listed companies . The decrease in IPOs is concomitant with the rise in acquisitions of the most promising firms by large foreign companies (Tingle et al, ), including acquisitions of venture capital (VC)‐backed firms (Carpentier and Suret, ). Studies of this IPO market are scarce, generally dated, and restricted to the main market, the Toronto Stock Exchange (TSX).…”

Section: Introductionmentioning

confidence: 99%

Three Decades of IPO Markets in Canada: Evolution, Risk and Return

Carpentier

Suret

2018

Accounting Perspectives

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This article explores the extent that the long‐run returns following initial public offerings (IPOs) can explain the asserted decrease in IPOs in Canada. The causes of such a decrease remain controversial, in part because of our limited knowledge of this market. We first describe in detail the evolution of Canadian IPOs on the senior and the venture stock exchanges over three decades (1986–2016). This evolution differs considerably between natural resource and non‐natural resource firms. Second, using other junior markets as a benchmark, we show that the Canadian IPO market is very particular, mainly because it lists very small firms at an early development stage. Third, using 2,145 Canadian IPOs, we provide evidence that these IPOs generate three‐year negative average abnormal returns, and more than 70 percent report negative abnormal returns. Large issuers reporting profits constitute the only subsample that provides fair returns, but they account for less than 5 percent of IPOs. Such a market probably survived for many decades because of investors' preference for skewness and the characteristics of the returns' distribution. We observe a high level of skewness of abnormal returns, consistent with the behavioral finance proposition that investors are often unduly optimistic when valuing lottery stocks.

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“…In the absence of scale-up capacity, growth and growth-potential companies, particularly technology companies, in Europe 2 are increasingly being acquired by companies headquartered outside the region. One interpretation of this phenomenon is what might be described as the sell-out problem, resulting in the "hollowing out" of companies that are acquired on account of the progressive loss of so-called "headquarters functions" (strategy, R&D, marketing) which are provided by the acquiring company (Carpentier and Suret 2014), the loss of technical and managerial talent as it is integrated into the parent company and even the closure of the company in its entirety. The consequence is that the growth potential and economic contribution of these companies are lost, and the benefits arising from the support they have received from the economic development agencies accrue elsewhere.…”

Section: Market Evolution -New Structuresmentioning

confidence: 99%

Venture Capital 20 years on: reflections on the evolution of a field

Harrison

Mason

2019

Venture Capital

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This paper reviews the circumstances surrounding the launch of Venture Capital: An International Journal of Entrepreneurial Finance in 1999. It highlights a number of significant changes in the structure of the entrepreneurial finance market over the past 20 years, notably the decline of "classic" venture capital, the effective closure of the small-cap IPO market, the scale-up problem and the emergence of a second equity gap, the geographical dispersion of venture capital and the institutionalisation of the business angel market. A number of new players in the marketcoinvestment schemes, equity crowdfunding platforms and blockchain technology-based Initial Coin Offeringsare discussed and the challenges and opportunities they pose for investors, entrepreneurs, policy makers, regulators and academic researchers are assessed. Against this background, a number of key features of the evolution of the content and focus of the Journal are discussed. The paper finishes with a summary of the papers included in this Special Issue.

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Post-Investment Migration of Canadian Venture Capital-Backed New Technology-Based Firms

Cited by 5 publications

References 24 publications

Emerging trends in government venture capital policies in smaller peripheral economies: Lessons from Finland, New Zealand, and Estonia

Emerging trends in government venture capital policies in smaller peripheral economies: Lessons from Finland, New Zealand, and Estonia

Three Decades of IPO Markets in Canada: Evolution, Risk and Return

Venture Capital 20 years on: reflections on the evolution of a field

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