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Annualized and Cumulative Returns on Venture-Backed Public Companies Categorized by Industry

  • Amir Shachmurove

    (The University of Pennsylvania)

  • Yochanan Shachmurove

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

This paper investigates the actual performance of 2,895 Initial Public Offerings of companies that were backed by venture capital from 1968 through 1998. It seeks to refute the myth that investors demand very high annualized and cumulative rates of return to compensate for the risks they are taking by financing ventures. In fact, it argues that, based on historical statistics, the total returns of the venture capital market are reasonable given the level of risk. This is done by concentrating on sections of various types of industries that have been supported by venture capital.

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File URL: http://jefsite.org/RePEc/pep/journl/jef-2004-09-3-e-shachmurove.pdf
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Article provided by Pepperdine University, Graziadio School of Business and Management in its journal Journal of Entrepreneurial Finance and Business Ventures.

Volume (Year): 9 (2004)
Issue (Month): 3 (Fall)
Pages: 41-60

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Handle: RePEc:pep:journl:v:9:y:2004:i:3:p:41-60
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Web page: http://bschool.pepperdine.edu/jef

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  1. Gompers, Paul A., 1996. "Grandstanding in the venture capital industry," Journal of Financial Economics, Elsevier, vol. 42(1), pages 133-156, September.
  2. Lerner, Josh, 1995. " Venture Capitalists and the Oversight of Private Firms," Journal of Finance, American Finance Association, vol. 50(1), pages 301-18, March.
  3. 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.
  4. 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.
  5. 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.
  6. Mansfield, Edwin, 1983. "Technological Change and Market Structure: An Empirical Study," American Economic Review, American Economic Association, vol. 73(2), pages 205-09, May.
  7. 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.
  8. Yochanan Shachmurove, . "An Empirical Investigation of IPO's Annualized Returns in the Last Three Decades," Penn CARESS Working Papers 823ad5f6b6eb3583cc703364e, Penn Economics Department.
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