Unicorn Exits and Subsequent Venture Capital Investments

Suren Karapetyan () and Matěj Bajgar
Additional contact information
Suren Karapetyan: Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic

No 2025/9, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: Using a difference-in-differences design and a global database of startups, investors and deals, we study the effect of exits (IPOs and acquisitions) of unicorn companies - privately held startups valued over USD 1 billion - on the subsequent investment activity of their investors. We find that an exit by a unicorn startup increases the number of investments by its investors over the following 3 years by about 7.5% and the value of their investments by about 23%, relative to investors in a matched control group. The effects are driven by IPOs and early investors of the exiting unicorns: a unicorn IPO leads, on average, to 2 additional investments and additional USD 13 million invested by each of the unicorn's early investors. Post-exit investments increase both within and outside of the location and the industry of the exited unicorn, but the growth in investments outside the original geography and industry is more pronounced. The results provide evidence of an important mechanism in which a successful investment exit boosts subsequent venture capital activity, but they also indicate that this activity need not be concentrated in the same locations and industries.

Keywords: Unicorn Exits; IPOs; M&As; Early-stage Investors; Startup Ecosystem (search for similar items in EconPapers)
JEL-codes: G24 G32 G34 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2024-09, Revised 2024-09
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-pay and nep-sbm
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ies.fsv.cuni.cz/en/unicorn-exits-and-subse ... -capital-investments (application/pdf)

Related works:
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: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2025_09

Access Statistics for this paper

More papers in Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Natalie Svarcova ().