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The Exit Rates of Liquidated Venture Capital Funds

Author

Listed:
  • Markus Laine

    (Eqvitec Partners)

  • Sami Torstila

    (Helsinki School of Economics)

Abstract

Exit rates provide a simple yet practical measure for evaluating and benchmarking the performance of venture capital funds. We create a sample of 138 liquidated U.S. venture capital funds and investigate the outcomes of their 4,549 portfolio companies. We study exit rates, proportions of different exit routes, and their determinants. The median fund in our sample exited 19% of portfolio companies through an IPO, 7% through a sale of listed equity, and 23% through mergers or acquisitions. There exist, however, interesting differences between fund types: In particular, large funds and fund management firms have significantly higher exit rates.

Suggested Citation

  • Markus Laine & Sami Torstila, 2005. "The Exit Rates of Liquidated Venture Capital Funds," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 10(1), pages 53-73, Spring.
  • Handle: RePEc:pep:journl:v:10:y:2005:i:1:p:53-73
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    More about this item

    Keywords

    Capital ; Exit ; IPO ; Venture Capital;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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