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Venture–Backed Firms: How Does Venture Capital Involvement Affect Their Likelihood of Going Public or Being Acquired?

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  • Roberto Ragozzino
  • Dane P. Blevins

Abstract

This paper investigates how venture capitalists’ involvement in new ventures affects the likelihood of entrepreneurial exit, either via an acquisition or via an initial public offering. We examine the prominence of venture capitals (VCs), the number of VCs invested in a company, as well as the timing, duration, and magnitude of their investments in new ventures. We find that each of these dimensions directly explains entrepreneurial exit, although their effects tend to differ depending on whether the exit occurs via an acquisition or an initial public offering (IPO). These results withstand several robustness checks and offer a more precise account of how the relationship between new ventures and VC firms unfolds in the early years of the entrepreneurial cycle.

Suggested Citation

  • Roberto Ragozzino & Dane P. Blevins, 2016. "Venture–Backed Firms: How Does Venture Capital Involvement Affect Their Likelihood of Going Public or Being Acquired?," Entrepreneurship Theory and Practice, , vol. 40(5), pages 991-1016, September.
    • Handle: RePEc:sae:entthe:v:40:y:2016:i:5:p:991-1016
    DOI: 10.1111/etap.12154
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    4. Renko, Maija & Yli-Renko, Helena & Denoo, Lien, 2022. "Sold, not bought: Market orientation and technology as drivers of acquisitions of private biotechnology ventures," Journal of Business Venturing, Elsevier, vol. 37(1).

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