An Index For Venture Capital, 1987-2003

Hwang Min (), John Quigley and Woodward Susan E. ()
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Hwang Min: National University of Singapore
Woodward Susan E.: Sand Hill Econometrics

The B.E. Journal of Economic Analysis & Policy, 2005, vol. 4, issue 1, 1-43

Abstract: In this paper we build an index of value for venture capital. Our approach overcomes the problems of intermittent, infrequent pricing of private company deals by using a repeat valuation model to build the index, and it corrects for selection bias in the reporting of values. We use a unique data set from Sand Hill Econometrics which reports 50,734 funding events, which include the contemporaneous valuations of 9,092 private equity firms disclosed 19,208 times over almost 17 years. The resulting index measures the return and risk for venture capital. Its covariance with other asset classes from 1987 through 2003 enables us to explore the role of venture capital in diversified portfolios during a period of increased importance of venture capital in the economy.

Keywords: Private Equity; Price Index (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (7)

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DOI: 10.2202/1538-0645.1180

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