When are venture capital projects initiated?

Yong Li; Joseph T. Mahoney

doi:10.1016/j.jbusvent.2009.08.001

When are venture capital projects initiated?

Research output: Contribution to journal › Article › peer-review

Abstract

This paper examines how public market information relates to the initiation of venture capital projects. Analysis of venture capital investments in the U.S. between 1980 and 2007 indicates that venture capitalists tend to defer new investment projects in target industries with substantial market volatility. This delay effect of market volatility is reduced if the target industry experiences high sales growth or if competition among venture capitalists is intense in the target industry. The paper provides further evidence to corroborate the view that venture capitalists rationally respond to market shifts in their investment decisions.

Original language	English (US)
Pages (from-to)	239-254
Number of pages	16
Journal	Journal of Business Venturing
Volume	26
Issue number	2
DOIs	https://doi.org/10.1016/j.jbusvent.2009.08.001
State	Published - Mar 2011

Keywords

Competition
Growth
Investment timing
Real options
Uncertainty
Venture capital

ASJC Scopus subject areas

Business and International Management
Management of Technology and Innovation

Online availability

10.1016/j.jbusvent.2009.08.001

Library availability

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Cite this

@article{2dc173760e36481ea148c2ec4af0baa2,

title = "When are venture capital projects initiated?",

abstract = "This paper examines how public market information relates to the initiation of venture capital projects. Analysis of venture capital investments in the U.S. between 1980 and 2007 indicates that venture capitalists tend to defer new investment projects in target industries with substantial market volatility. This delay effect of market volatility is reduced if the target industry experiences high sales growth or if competition among venture capitalists is intense in the target industry. The paper provides further evidence to corroborate the view that venture capitalists rationally respond to market shifts in their investment decisions.",

keywords = "Competition, Growth, Investment timing, Real options, Uncertainty, Venture capital",

author = "Yong Li and Mahoney, {Joseph T.}",

note = "Funding Information: We thank Glenn Hoetker, Yasemin Kor, Jing Liu, Doug Miller, Gordon Walker, and the participants at the 2008 Atlanta Competitive Advantage Conference at Emory University for their valuable comments. We owe special thanks to the Associate Editor, Don Siegel, for his guidance. We acknowledge the financial support from the Academy of Entrepreneurial Leadership at the University of Illinois. The usual disclaimer applies. ",

year = "2011",

month = mar,

doi = "10.1016/j.jbusvent.2009.08.001",

language = "English (US)",

volume = "26",

pages = "239--254",

journal = "Journal of Business Venturing",

issn = "0883-9026",