The performance of venture capital investments: Do investors overreact?

Review of Financial Economics - Tập 22 - Trang 20-35 - 2013
Ann-Kristin Achleitner1, Nico Engel1, Uwe Reiner1
1Center for Entrepreneurial and Financial Studies (CEFS), TUM Business School, Technische Universität München, Arcisstr. 21, 80333 Munich, Germany

Tóm tắt

AbstractUsing a unique proprietary data set of over 5400 realized and unrealized venture capital investments between 1980 and 2005, we examine the impact of demand‐related factors, e.g. entrepreneurial activity, as well as supply‐related factors, i.e. money provided by VC investors, on the return of individual VC investments. This way, we are able to shed more light on the question whether volatile VC investment returns are rather driven by fundamental changes with regard to the number of attractive investment opportunities or by the overreaction by investors. We find that rising demand for VC, i.e. an increase in entrepreneurial activity, results initially in higher returns. However, our results also indicate that overreaction on the supply side can be observed, destroying deal‐level results. Overfunding, specifically overinvesting seems to be a recurring characteristic of the VC industry. In fact, contra‐cyclical investment strategies yield highest deal‐level returns.

Tài liệu tham khảo

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Review of Financial Economics

Tập 22

20-35

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