IPOs, Trade Sales and Liquidations: Modelling Venture Capital Exits Using Survival Analysis

Pierre Giot () and Armin Schwienbacher
Additional contact information
Armin Schwienbacher: University of Amsterdam

Finance from EconWPA

Abstract: Using a detailed sample made up of more than 20,000 investment rounds, we analyze the time to ‘IPO’, ‘trade sale’ and ‘liquidation’ for about 6,000 venture backed firms. We model these exit times using competing risks models. Biotech and internet firms have the fastest IPO exits. Internet firms are also the fastest to liquidate, while biotech firms are however the slowest. The conditional probability for IPOs are clearly non-monotonous with respect to time. As time flows, venture capital-backed firms first exhibit an increased likelihood of exiting to an IPO. However, after having reached a plateau, investments that have not yet exited have fewer and fewer possibilities of IPO exits as time increases. The bubble period from 1998 to 2000 was an ‘easy money’ period where venture capitalists gave much more money to firms, many of which did not offer outstanding growth potential as they tended to liquidate much faster than in normal times.

Keywords: IPO; trade sale; venture capital; exit; survival analysis (search for similar items in EconPapers)
JEL-codes: G (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-ent and nep-fin
Date: 2003-12-10
Note: Type of Document - pdf; prepared on Win98; pages: 42
View list of references

Downloads: (external link)
http://129.3.20.41/eps/fin/papers/0312/0312006.pdf (application/pdf)

Related works:
Working Paper: IPOs, trade sales and liquidations: modelling venture capital exits using survival analysis (2005)
Journal Article: IPOs, trade sales and liquidations: Modelling venture capital exits using survival analysis (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:0312006

Access Statistics for this paper

More papers in Finance from EconWPA
Series data maintained by EconWPA ().