IDEAS home Printed from https://ideas.repec.org/p/zbw/cfswop/201002.html
   My bibliography  Save this paper

Are particular industries more likely to succeed? A comparative analysis of VC investment in the US and Europe

Author

Listed:
  • Kraeussl, Roman
  • Krause, Stefan

Abstract

The objective of this study is to determine whether specific industries across countries or within countries are more likely to reach a stage of profitability and make a successful exit. In particular, we assess whether firms in certain industries are more prone to exit via IPO, be acquired, or exit through a leveraged buy-out. We are also interested in analyzing whether substantial differences across industries and countries arise when looking separately at the success' rate of firms which have received venture funding at the early seed and start-up stages, vis-à-vis firms that received funding at later stages. Our results suggest that, inasmuch as some of the differences in performance can be explained by country-specific factors, there are also important idiosyncratic differences across industries: In particular, firms in the biotech and the medical / health / life science sectors tend to be significantly more likely to have a successful exit via IPO, while firms in the computer industry and communications and media are more prone to exit via merger or acquisition. Key differences across industries also emerge when considering infant versus mature firms, and their preferred exit.

Suggested Citation

  • Kraeussl, Roman & Krause, Stefan, 2010. "Are particular industries more likely to succeed? A comparative analysis of VC investment in the US and Europe," CFS Working Paper Series 2010/02, Center for Financial Studies (CFS).
  • Handle: RePEc:zbw:cfswop:201002
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/43244/1/62276084X.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March.
    2. Jeng, Leslie A. & Wells, Philippe C., 2000. "The determinants of venture capital funding: evidence across countries," Journal of Corporate Finance, Elsevier, vol. 6(3), pages 241-289, September.
    3. Gompers, Paul & Kovner, Anna & Lerner, Josh & Scharfstein, David, 2008. "Venture capital investment cycles: The impact of public markets," Journal of Financial Economics, Elsevier, vol. 87(1), pages 1-23, January.
    4. Robert J. Gordon, 2002. "Technology and Economic Performance in the American Economy," NBER Working Papers 8771, National Bureau of Economic Research, Inc.
    5. Samuel Kortum & Josh Lerner, 2000. "Assessing the Contribution of Venture Capital to Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 674-692, Winter.
    6. Cochrane, John H., 2005. "The risk and return of venture capital," Journal of Financial Economics, Elsevier, vol. 75(1), pages 3-52, January.
    7. Elisabete Félix & Cesaltina Pires & Mohamed Gulamhussen, 2013. "The Determinants of Venture Capital in Europe — Evidence Across Countries," Journal of Financial Services Research, Springer;Western Finance Association, vol. 44(3), pages 259-279, December.
    8. Paul Gompers & Josh Lerner, 2001. "The Venture Capital Revolution," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 145-168, Spring.
    9. Murray, Gordon C. & Marriott, Richard, 1998. "Why has the investment performance of technology-specialist, European venture capital funds been so poor?," Research Policy, Elsevier, vol. 27(9), pages 947-976, December.
    10. Kristiina Raade & Catarina Dantas Machado Rosa, 2008. "Recent Developments in the European Private Equity Markets," European Economy - Economic Papers 2008 - 2015 319, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kraeussl, R. & Krause, S., 2011. "Has Europe Been Catching Up? An Industry Level Analysis of Venture Capital Success over 1985 - 2009," Working papers 327, Banque de France.

    More about this item

    Keywords

    Venture Capital; Success Rates; Country Comparison; Industry Comparison; Biotech Firms;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G3 - Financial Economics - - Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:cfswop:201002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics). General contact details of provider: http://edirc.repec.org/data/ifkcfde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.