Can Venture Capital Funds Pick Winners? Evidence from Pre-IPO Survival Rates and Post-IPO Performance

Yishay Yafeh and Hedva Ber

No 4672, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper evaluates the ability of venture capital funds to identify and bring to market successful high-tech Israeli companies during the period 1991 to 2000. Using a newly constructed and highly detailed database we find that: (1) The probability of survival until the IPO stage is higher for venture-backed companies. (2) According to several different measures, conditional on making an IPO, the post-listing performance of venture-backed companies is not statistically different from that of non-venture companies throughout the 1990s. We interpret this as evidence that an important contribution of the venture capital industry may be in increasing the survival rates of young technology-intensive firms, rather than in identifying high performers.

Keywords: Venture capital; Ipo; Survival rate; Long-run performance (search for similar items in EconPapers)
JEL-codes: G20 G30 (search for similar items in EconPapers)
Date: 2004-10
New Economics Papers: this item is included in nep-ent, nep-fin, nep-fmk and nep-ino
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Citations: View citations in EconPapers (1)

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