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Choosing Between Promising and Crowded Industries: How Does the Venture Capital Industry Fare in Each?

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Author Info

  • Amir Shachmurove

    ()
    (Department of Economics, University of Pennsylvania)

  • Yochanan Shachmurove

    ()
    (The City College of The City University of New York and the University of Pennsylvania)

Abstract

Incredible profits from Initial Public Offerings have been highly emphasized. This paper refutes these profits as being standard and supports the market’s return to normalcy by stratifying annual and cumulative returns for different industries: Biotechnology; Communications; Computer Related companies; Medical, Health and Life Science industries; Non-High-Technology companies; and Semiconductor and Other Electronics Industries. This paper tests whether an entrepreneur has greater potential for success in continually promising fields or whether one should slug it out in a risky but potentially very rewarding industry. A comparison of success is made between already competitive businesses and those, which are young and growing.

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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 04-044.

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Length: 25 pages
Date of creation: 17 Dec 2004
Date of revision:
Handle: RePEc:pen:papers:04-044

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Keywords: Initial public offering; venture capital; annualized and cumulative rates of return; Information Technology; Medical; Health and Life Science; Non-High Technology; Biotechnology; Communications; Computer Industry; Semiconductor and Other Electronics Industries;

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References

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  1. Gompers, Paul A., 1996. "Grandstanding in the venture capital industry," Journal of Financial Economics, Elsevier, Elsevier, vol. 42(1), pages 133-156, September.
  2. Mansfield, Edwin, 1969. "Industrial Research and Development: Characteristics, Costs, and Diffusion of Results," American Economic Review, American Economic Association, vol. 59(2), pages 65-71, May.
  3. Yochanan Shachmurove, . "An Empirical Investigation of IPO's Annualized Returns in the Last Three Decades," Penn CARESS Working Papers 823ad5f6b6eb3583cc703364e, Penn Economics Department.
  4. Paul Gompers & Josh Lerner, 1998. "Conflict of Interest in the Issuance of Public Securities: Evidence from Venture Capital," NBER Working Papers 6847, National Bureau of Economic Research, Inc.
  5. Emanuel Shachmurove & Yochanan Shachmurove, 2004. "Annualized Returns of Ventured-Backed Public Companies Stratified by Decades and by Stages of Financing," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 9(2), pages 109-123, Summer.
  6. Lerner, Josh, 1995. " Venture Capitalists and the Oversight of Private Firms," Journal of Finance, American Finance Association, American Finance Association, vol. 50(1), pages 301-18, March.
  7. Mansfield, Edwin, 1983. "Technological Change and Market Structure: An Empirical Study," American Economic Review, American Economic Association, vol. 73(2), pages 205-09, May.
  8. Mansfield, Edwin, 1986. "The R&D Tax Credit and Other Technology Policy Issues," American Economic Review, American Economic Association, vol. 76(2), pages 190-94, May.
  9. Yochanan Shachmurove, 2001. "Annualized Returns of Venture-Backed Public Companies Categorized by Stage of Financing: An Empirical Investigation of IPOS in the Last Three Decades," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 6(1), pages 44-58 , Spring.
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