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Rotterdam School of Economics, Erasmus UniversityInternational Bachelor Economics and Business EconomicsBachelor Thesis 2010 – 2011Does Venture Capital Contribute to the Success of Startups?A Literature ReviewJuly, 2011CoordinatorItalo ColantoneByGeorgi Nikolaev FilipovGeorge_vtbg@314992Table of Contents TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc298915688 \h 3Venture Capital and the startups PAGEREF _Toc298915689 \h 5History of VC PAGEREF _Toc298915690 \h 5Invest in young firms PAGEREF _Toc298915691 \h 6Literature Review PAGEREF _Toc298915692 \h 7Venture capital and the growth of Startups PAGEREF _Toc298915693 \h 7Venture Capital and Innovation PAGEREF _Toc298915694 \h 9Venture Capital and the contribution to IPO PAGEREF _Toc298915695 \h 11Public Policies PAGEREF _Toc298915696 \h 13Conclusion PAGEREF _Toc298915697 \h 15References PAGEREF _Toc298915698 \h 17Introduction Venture capital provides startup companies a long-term, committed share capital, in order to help them?develop?and?succeed. If an entrepreneur needs not only a financial aid, but also someone to turnaround or?revitalize?the company, venture capital could help?solving?this. Obtaining venture capital is significantly different from raising debt or taking a loan from a bank. Banks have the legal right to?interest?on a loan, irrespective of the success or failure of a business. The investment that Venture Capitalists?do?is compensated in exchange for certain share of the?business?and?therefore?the?interest?that they receive?is based?on the growth and profitability of the company.?Finally?the?return?is generated?when the?share?of the new businesses?is sold?to another owner.In a wide?variety?of articles it?is suggested?that VC’s role in a company extends way beyond the traditional financial?aspect, based on their expertise in different areas they?are?deeply?associated?with the management of the firms they finance. Gorman and Sahlman (1989)?observe?that, on average, venture capitalists?invest?more than 100 hours per year in?consultant?activity for each company. Even Hellmann and Puri (2002) examine the?influence?of venture capital on the development?rate?of new businesses, and?underline?the?important?job?venture capital has on creating?expertise?and competence in the internal organization of the firm. Their results?imply?that venture capitalists?maintain?new businesses to build up their human resources within the company.Fulghieri and Sevilir (2003) develop a theory of the organization and financing of innovation activities, in which the?decision?of?organization?and?financial?structure of R&D plays a strategic role.?In particular, they show that?independent?venture capital financing is more likely to emerge when: R&D projects have?high?research intensity, when competition in the R&D is less severe or the R&D cycle involves early-stage research, and when the research unit is not financially constrained.Jain and Kini (1995)?show?that funded companies that?have been listed?on a stock exchange experience greater?growth?in cash flows and sales. Lerner (1999) studies this topic in depth, taking into consideration Small Business Innovation Research (SBIR), an?important?American initiative to?support?high-tech firms. Looking at the success of firms over the long period, for the whole sample, he finds that?occupation?and sales growth rates are higher for SBIR funded firms than non-SBIR funded firms for the entire period between 1983 and 1995.Further more Megginson and Weiss (1991), Tykvova (2003) provide support for the certification hypothesis and the role venture capitalists?play?in?a firm’s IPO performance. The articles confirm that the monitoring?support?venture capitalist?provide?is?fundamental?for the investments they?choose.?So, according to the certification hypothesis, venture capitalists?obtain?a?major?equity positions, protect their investments and?serve?in the?board?of their portfolio companies.The purpose of this paper is to?review?the existing literature on the relationship between?venture capital and the success of startup firms.?In order to do so we?have?concentrate?our?research?on?three main characteristics?of startup firms that we considered most?distinctive?for their success: Firm’s?growth, Innovation and Initial?firm’s offerings (IPOs).?We believe that after examining the already existing literature on topics we will be able to?distinguish?if there can be significant?pattern?between VC and success of startups.?The paper will continue with the history of venture capital and the emergence of venture capital funding. Section three?is concerned?with the analyses on the literature review and the 3 main characteristics that we distinguished. Section four will?draw?some suggestions on future?policy?implementations and in section five we will summarize?our?conclusions.Venture Capital and the startups In this section the institutional details of venture capital organizations are briefly reviewed. The discussion highlights the structure and function of venture capital organizations and how venture capital is a distinct form of financing, separate from all other ways of generating funds, for young, entrepreneurial companies.History of VCAccording to Kortum and Lerner (1998) the venture capital industry in the United States gives its?birth?back in 1946, with the creation of the first venture?fun, American Research and Development. In the years between 1946 and 1977 a handful of?venture?funds?were established?following the revolutionary new?fund.?Although the money flows?back?then was no more than a few hundred million dollars annually and?normally?even lower.?An?important?factor that transformed the direction of?classical?venture investments was the change in the “Prudent man”?rule?after 1979.?Prior to that year?pension funds had a?limited?rights to?invest?significant amounts of money in venture capital by the Employee Retirement Income Security Act. The major impact that this amendment had can be observed from the figures we have in the years preceding and following to the correction in the rule.?In 1978?when $424 million?was invested?in new venture capital, only 15 percent of the money?was supplied?by pension funds.?However?eight years later the?amount invested?in venture capital accounted to $4 billion and more than half of it?was accumulated?by pension funds. In the years 1996 and 1997, there was another significant leap in venture capital activity.Invest in young firms Many start-up firms require?substantial?capital initially in order to set up the?business.?A?firm’s?founder?may not have sufficient funds to?finance?the planned projects?alone?at the beginning and will most probably?seek?for external ways of financing.?Entrepreneurial firms lacked the possibility to obtain bank loans or other debt financing, because they?were characterized?by?large?intangible assets, highly?uncertain?annual earnings and?low?survival rates. A high percentage of these young companies had the potential to grow?fast?and out-pay their investments, but due to their asymmetric?information?venture capital was the only?potential?source of financing.?Venture capitalist?role?was to?provide?those high-risk companies with a financial support and?in return?they would receive equity stakes while the firms are still privately held.?Firms such as Apple Computer, Cisco Systems, Genentech, Intel, Microsoft, Netscape, and Sun Microsystems?were?initially?financed?by venture capital organizations.The financial projects that venture capitalist get?involved with?differ?significantly from those?undertake?by corporate research laboratories.?Applying different kind of mechanisms, venture capitalists may?finance?a large portfolio of projects with a high degree of risk and at an early stage with no tangible assets.?An entrepreneurial?venture?is not restricted?to a technologically based?firm,?a commercialization?of an?invention?which results from R&D or an?innovative?cost reducing process. The?appliance?of already existing technologies, a product or service innovation or simply a?new?way of operating a?business?can also be considered as an entrepreneurial activity.(R. Amit 1990). The venture capitalist’s?willingness?to get involved in a project is most likely made conditional on the identification of a syndication?partner?who agrees on the?investment’s attractiveness (Kortum 1998).?Sahlman (1988) shows that staged financing solves agency conflicts between the venture capitalist and the?entrepreneur?because in contrast to the case when all the needed venture capital?is provided?in once now the?entrepreneur?has a stronger incentive to create value.?The company progressively decreases its level of risk as it develops, and?venture capitalist will receive a proportionately smaller incremental equity position for a given amount of investment at each successive stage. According to?Martin Kenney (2002) the?use?of equity investment rather than debt eliminates the problem of scheduled repayment.?It allows young companies to reinvest their earnings?and provides?an?asset?base which can be used to?attract?external?capital?and improve a company’s credibility with vendors and financial institutions.?Equity financing enables venture capitalists to undertake?substantial?investment risks since one?enormously?successful?investment?can more than offset a series of break-even investments or outright losses.Literature Review Venture capital and the growth of Startups Young, innovative and rapidly growing firms have to?invest?a substantial amount in resources before they can?obtain?a viable market?position.?However, the start-up’s equity position is?very?weak, and debt financing?is often restricted?by?certain?country specific or sector specific regulations.?According to Dirk Engel (2002) Venture capitalists take a?major?role in closing this gap by providing the financial support.?Moreover?those investors often?contribute?not only with the funding of such firms, but also with the implication of a monitoring?control?and strategic management expertise in the early stage. Both types of support indicate?a positive impact?on growth rates of the venture-backed firms.?The role of venture capitalists offers some favorable?conditions for the?growth?of venture-backed firms.In a vast amount of recent studies?venture-backed firms?are compared?to those that have obtained no venture capital at all and?perform?in similar sectors in order to?examine?the?influence?of VC on the tendency to?grow.?Whether access to VC financing actually spurs the growth of?investee?companies is a matter of empirical testing.?For example, Alemany and Marti (2005) compare the population of the 323 Spanish firms that obtained VC financing in the period 1993-1998 with a control taste of similar but non VC-backed companies. Matching?is based?on the?region?in which firms?are located, sector of activity, age and size in the year in which VC financing?was obtained.?The researchers believe firms’ sales, employment and total assets; and calculate average growth from the “event” year up to the third year after the event, making a?distinction?according to the stage of the?investee?company’s life (i.e. start-up, growth, mature) in which VC financing?was obtained.?VC-backed companies?are found?to outperform their non VC-backed counterparts if VC investment takes place in the start-up or?growth?stage.Massimo G. Colombo and Luca Grilli (2005) analyze the effect of VC financing on the growth of sales and?employment?of startup firms in subsequent years. For this purpose, they examine a?sample?of 537 new Italian firms for the period 1993- 2003. The purpose is to evaluate what is the?impact?of VC on the?firm’s?subsequent?growth and whether the degree of this effect varies according to the nature of the investors (specialized venture capital or corporate venture capital).Estimates reveal that venture capital financing has a significantly positive effect on the development of startups. The marginal increase in the number of the?firm's?employees is decreasing over time, indicating that VC has a higher impact on?the firm’s?growth?in the first years following the financing.Manigart?and Hyfte (1999)?find?that the rate of growth of total assets of a sample composed of 187 Belgian VC-backed firms is significantly greater than that of the control sample in each year starting in the year in which the?firm?obtained VC financing and for the?following?five years. Lastly, the growth rate of?employment?is greater in the VC-backed sample only when one considers?star?performers that are the firms that belong to the percentiles with the greatest growth, and a sufficiently long period (at least three years after the investment).Moreover, Engel and Keilbach (2002) analyze the impact of venture capital investment?on?growth and?innovation?of 142 young German firms.?To test their hypotheses they use the nearest neighbor?criterion?with an additional requirement that the firms have to operate in the same industry and to be established in the same year as the?venture?baked firms.?Based on this method they found evidence that venture-funded firms exhibit significantly higher growth rates compared to their non-venture-funded counterparts, thus venture capital firms make a significant contribution in this respect.Other studies like (Gorman and Sahlman 1989, Bygrave and Timmons 1992, Sapienza 1992, Kaplan and Str?mberg 2004) focus on the fact that VCs?perform?a significant coaching?function?to the benefit of?investee?firms. They provide portfolio companies with consulting services in fields such as strategic management, marketing communication, finance and human resource management, where these firms typically?lack?internal capabilities. For instance, Hellman (2002) proves that VCs support the?engagement?of external managers, the implementation of investments plans or?participation?in the HR polices of the invested firms, thus reflecting in the company’s managerial expertise and?growth. Moreover, venture-baked firms can?contribute?from the already established networks of their investors such as suppliers, prospective clients, partners or alliances.Venture Capital and Innovation According to R. and Kenney,M.?(1988)?venture?capitalist?are well known?for two core activities: providing funds and assisting in the emergence of new high technology businesses. They actively cultivate networks comprised of financial institutions, universities, large corporation’s entrepreneurial firms and other organizations.?These networks and the data?flow?at their disposal let them reduce many of the risks associated with new venture?formation?and thus?go?easier through the barriers innovation cycle can?have.?Venture capital-financed innovation is a “new?model” of innovation which goes beyond both traditional?entrepreneurship?and corporate-based innovation.Kotrum?and Lener?test?the possibility that venture capital and patenting may not be the only factors that affect?innovation?and suggest that entrepreneurial opportunities is an unobserved variable which can also be positively correlated to?innovation.?They try to?reach?the reasons about causality by explaining two different factors. First, they?observe?the amendment in the “Prudent Man”?rule?made after 1979 by the Employee Retirement Income Security Act and the followed discontinuity effect in the total investments.?As discussed earlier in the?paper?the?change?allowed pension funds to invest in venture capital industry which lead to a substantial increase in the money flow.?They argue that such an exogenous change should?confirm?the?significance?of venture capital as an?instrument?to?boast?innovation, because it is?irrelevant?to be connected to the?appearance?of entrepreneurial activity. Second, they examine R&D expenditures to?test?for the?occurrence?of technological opportunities that?were expected?during that time, but?were not taken?into account by econometricians. They use a?simple?model?framework?to prove that the causality effect evaporates if we?asses?the?impact?that venture capital has on patent R&D ratio, rather than on patenting itself.Although these causality problems?have been observed, findings?still?support?the?major?importance?of venture capital on innovation.?The results obtained through different models?imply?that an investment made by venture capital?fund?can be up to ten times more?valuable?to?patent?creation,?compared to a traditional corporate R&D investment.?Moreover, they?estimate?that regardless of the fact that venture capital was in?total?3% less than corporate R&D in the last years, it contributed with 15% more to the U.S industrial innovations.Hellmann and Puri (2000) use a different way to show that venture capital leads to more innovation.?They?suggest?that higher levels on innovation?are caused?not?just?by venture capital in general, but rather because venture capitalist?have?the incentive to respond on?important?technological opportunities?which?are?likely?to lead to more innovation.?In their observations?they use a?sample?of 170 recently formed firms, comparing venture-backed?to non-venture firms.?After?performing?a questionnaire survey, they?advocate?that venture capitalist are not only involved in the financing, but?are also associated?with the marketing strategies and outcomes of the firms.?Moreover?startups that?position?innovation as an underlying strategy in their work?obtain?venture capital significantly faster. They?find?a?straight?correlation between venture capital?presence?in a firm and the time needed to?promote?a product to the market.In addition, firms are more likely to?mark?involvement?of venture capital in their business, as the most?vital?point?in their development, compared to other financial inflows. The results indicate significant interrelations between investor?category?and product market dimensions, and a?function?of venture capital in encouraging innovative companies. Knowing the relatively small sample of firms and the scars data available, just a?moderate?concerns about the causality can be done. Unfortunately, we can not reject?probability?that?innovative?startups?prefer?venture capital for?financial?reasons, rather than VC to?create?innovations.Caselli, Gatti and Perrini?perform?another?research?on?whether?venture capital spurs innovation inside funded firms by analyzing the number of registered patents before and after funding.?They analyze 37 Italian venture baked firms and by a?matching?way they?choose?37 twin non-venture backed firms.?However?the results differ significantly from the literature cited above. Before funding, funded firms?show?0.3327 more patents than non-funded firms?do?per year, on average; after funding, they report 0.53825 fewer patents than their twins?do?per year, on average.?The propensity to innovate seems?an?essential requirement for passing the screening phase of the venture capitalists’ selection process, but?on the other hand, the entry of venture capital into the company does not?promote?continued innovation.Venture Capital and the contribution to IPO Venture capitalists are similar to leveraged-buyout (LBO)?specialists, who seem to contribute to significant improvements in performance in corporations that?go?private.?Like LB0 specialists, venture-capital providers?are involved?in financing and monitoring their portfolio companies. LB0 specialists and venture capitalists invest in different kinds of firms,?however: LB0 promoters usually invest in mature companies with predictable cash flows, whereas venture capitalists focus on?young?and high-risk entrepreneurial ventures. The venture-capital?market?therefore?provides a?useful?alternative setting in which to explore the role of active investors with concentrated ownership claims.The role of venture capital investment on initial public offerings?has been extensively discussed?in the literature. Two papers can be?significantly?distinguished among others: those of Megginson and Weiss (1991) and Barry, Muscarella, Peavy, and Vetsuypens (1990) as one of the first to?examine?more?deeply?the?topic. Megginson and Weiss (1991)?suggest?that because of the venture capital “certification”, IPOs of companies that?are venture-backed?are less?under priced?than non-venture backed IPOs.?The term venture capital certification represents the belief that venture capitalist are?concerned about their reputation, because of their repeat actions on the IPOs market.?Therefore?they would?value?the IPOs of the firms they?bake?more realistically and closer to the true intrinsic value of the firm. Matched by industry and offering size, indicates that VC backed firms are significantly younger, have greater median book values of assets, and a larger percentage of?equity?in the capital?structure?than their non-VC backed counterparts. In addition, VC backed firms are able to attract higher quality underwriters than non-VC backed IPOs. Barry et al (1990) also?imply?that?same?observations that venture-backed IPOs are less?under priced?compared to non-venture backed IPOs.?Although, they argue that the difference in the pricing of IPOs is?due?to the fact that the capital market is aware of IPOs with better monitors.?More precisely, venture capitalist?fund?only the top part of the firms?in?the market,?therefore?a better quality from these firms?is expected.According to Bharat A. Jain and Omesh Kini (1995) the market appears to recognize the importance of monitoring by venture capitalists and the followed higher valuations at the time of the IPO. They examine the?proposition?by comparing the post-issue operating performance of?venture?backed IPOs with a matched sample of non-venture backed IPOs. The results show that the involvement of VCs speeds up the process of development and allows the company to go public earlier than it would be otherwise possible. The companies also?go?public with a higher valuation than would be possible otherwise, providing issuers with additional capital at the IPO. Further, in the initial stages of a public corporation, VC monitoring ads?value?as evidenced for improved corporate performance. From the investors’ point of view, VC participation signals?quality. This should lead to increased interest in VC-backed IPOs compared to similar non-VC-backed issues.However, in more recent papers the?contrary?results?have been documented.?Lee and Wahal (2000) suggest that for the period between 1980 and 2000, venture backed companies have actually been more?under priced?than non-venture backed companies.?Results show that VC backed IPOs exhibit greater?underprice?than non-VC backed IPOs. The?return?differential?ranges from 5.0% to 10.3% over the entire sample period. During the internet bubble period of 1999–2000, the differential is significantly larger. The authors interpret these results with the grandstanding hypothesis which in other words?indicate?a negative correlation between?venture?firm?reputations and?underprice. Since establishing?reputation?is so?important?for future?fund raising, venture capital firms are willing to?bear?the cost of?underprice?because taking a company?public?signals?quality.Reopening the debate about the role of VC in IPOs Thomas J. Chemmanur and Elena Loutskina (2006) approach the debate from a different?perspective?and use a different hypothesis.?What they?suggest?is to distinguish between the hypotheses about venture funding mentioned above and include a third probable?hypothesis?that they refer to as “market power”. It reflects the possibility that venture capitalist can use their?powerful?positions on the market due to the strong relationships they?build?with the participants in the market. These long-term connections allow them to?pull?a higher participation by underwriters, institutional investors or analysts and?acquire?higher prices for the IPOs of their firms. Venture capitalists may be motivated to achieve higher valuations for the IPOs of firms backed by them, due to concern for?reputation?with their own?venture?fund?investors and entrepreneurs. This?reputation?is essential for venture capitalists’ ability to?raise?financing for future venture funds. Results reject the certification?hypothesis?and provide significant support for the market power hypothesis. We find that venture backed IPOs are much more?overvalued?than non-venture backed IPOs and that high-reputation VC backed IPOs are more?overvalued?than low-reputation VC backed IPOs, both at the bid price and?at?the closing of the first trading day. The difference in valuation between venture backed and non-venture backed IPOs (and between high-reputation and poor reputation VC backed IPOs) becomes larger at the start of trading in the secondary market, but dissipates over time, almost disappearing at the end of the third year after the IPO. Public Policies As already mentioned in the above literature review?the impact of venture capital on innovation is?likely to?differ?with the venture capital cycle.?Yet government policies have often been focused to provide support during periods when venture capital industry is most?active?and also?targeting sectors in the?business?that have already been strongly funded by venture capitalist.A successful approach would be to address the gaps in the venture financing process. Investments made by venture capitalist tend to be centered in?mainly?in technology areas that?are already supposed?to have a high potential.?The tools that?have been used?till now to increase venture?fund?raising, such as shifts in the capital gain tax rates, seemed to?focus?the?competition?in one sector rather than?diversify?the firms that receive funding.?Policymakers should try to?react?on these conditions by (i) drawing the attention on technological opportunities that are still not explored by venture funds and (ii) providing support to companies that?have been financed?by venture capitalist but are in?a down period.More generally, one of the best possible solutions for government polices to provide assistance may be to increase the demand for venture capital, rather than the flow of capital.Therefore?the effort to?build?more?attractive?image of?entrepreneurship?activity through tax policy, may result in a significantly positive?way?to the amount of venture capital investments and the returns they?yield. The less direct action can?contribute?the most for the survival of the venture capital industry.The analyzes on the?growth?of venture-baked firms showed that venture capital can without any doubt?foster?the?growth?of startups. An?important?policy issue?obviously?is whether VC baked startup?investment?can be influenced more directly by means of taxes or subsides. Indeed most countries offer many programs to assist startup?entrepreneurship, and part of it?is explicitly directed?towards the VC industry. Most of these programs subsidize the cost of capital by means of credit guarantees to facilitate bank?finance?at a lower interest rate. These subsidies have in common that they are not?performance?related. Since these firms do not generate revenue during the startup phase, the return to entrepreneurs and investors mainly consists of capital gains.?For this reason policy?makers often?propose?to reduce the capital gain taxes.Conclusion This paper has examined the contribution of venture capitalist to the success of startups.?For this?purpose?it?was performed?a literature review on an extensive?volume?of articles associated with the effects of venture capital on?entrepreneurship. We mainly focused our observation on three?key?characteristics of the success for startups which we?distinguish?in the beginning of the article: Firm’s?growth, Innovation and Initial?firm’s offerings (IPOs). Although not all of the examined studies showed a clear?pattern?that VC contributes to the success of startups, the wider part of the literature supports the?assumption?that VC has a?main?role in the future success of startups.Engel and Keilbach (2002) performed an empirical test on the impact of venture capital investment on the?growth?of 142 young German firms. They found evidence that venture-funded firms exhibit significantly higher growth rates compared to their non-venture-funded counterparts, thus venture capital firms make a significant contribution in this respect.?Similarly?Massimo G. Colombo and Luca Grilli (2005) proved the existence of a direct causality relationship between VC investment and?startup's?growth after observing a?sample?of 537 new Italian firms.Kortum and Lerner (1998) researched twenty different industries in order to determine whether VC has?an impact?on the patent innovations Although some causality concerns occurred, the findings support the positive impact of venture capital industry on innovation.?Their estimates suggest that regardless of the fact that venture capital was in?total?3% less than corporate R&D in the last years, it contributed with 15% more to the U.S industrial innovations.?In addition according to Bharat A. Jain and Omesh Kini (1995) the market appears to recognize the?importance?of venture capitalist’s monitoring role in determining the IPOs prices.?They?observe?causalities for this by comparing a?sample?of venture backed IPOs to a matched sample of non-backed IPOs.Nevertheless, Thomas J. Chemmanur and Elena Loutskina (2006) use a different approach to?examine?the debate about venture capital and IPOs pricing. They include a third hypothesis, which they referred to as “market power”, showing the?possibility?that venture capitalist can use their long-term connections on the market in order to?acquire?higher prices for the IPOs of their firms. Results reject the certification?hypothesis?and provide significant support for the market power hypothesis.?We find that venture backed IPOs are much more?overvalued?than non-venture backed IPOs and that high-reputation VC backed IPOs are more?overvalued?than low-reputation.It can be identified from the literature cited above that VC?perform?a?crucial?role in the development of startup firms. In order to summarize our research it should be mentioned that?empirical?evidences, concerned with all the?main?characteristics observed in the paper, confirmed the?highly?contributive?function?of VC to the success of startups. References: 1. Stefano Caselli, Stefano Gatti and Francesco Perrini. (2009). Are Venture Capitalists a Catalyst for Innovation?.?European Financial Management,. 15 (1), p92 Samuel 10. WILLIAM L. MEGGINSON and KATHLEEN A. WEISS. (July 1991). Venture Capitalist Certification in Initial Public Offerings.?THE JOURNAL OF FINANCE. VOL. XLVI, (3), 2. Kortum and Josh Lerner. (Winter 2000). Assessing the contribution of venture capital to innovation.?RAND Journal of Economics. 31 (4), pp. 674-692.–111. 3. Samuel Kortum and Josh Lerner. (December 1998). Does venture capital spur innovation .?NBER Working Paper?. 1 (6846), 1.4. Josh Lerner . (2000). Negotiation, Organizations and Markets Research Papers.?Harvard NOM Research Paper. 1 (03-13), 1.5. Masayuki Hirukawa and Masako Ueda. (September 2008). Venture Capital and Innovation: Which is First.?none. 6. Richard Florida and Martin Kenney . (November 1987). Venture Capital-Financed innovation and technological change in USA.?none. 7. Christopher B. Barry. (August 1990). The role of venture capital in the creation of public companies.?Journal of Financial Economics. 27 8. Thomas J. Chemmanur* and Elena Loutskina. (September, 2006). The Role of Venture Capital Backing in Initial Public Offerings: Certification, Screening, or Market Power.?9.Bharat A. Jain and Omesh Kini. (1995). Venture Capitalist Participation and the Post-issue Operating Performance of IPO Firms.?MANAGERIAL AND DECISION ECONOMIC. 16 (1), 593-606. ................
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