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Can Venture Capital Funds Pick Winners? Evidence from Pre-IPO Survival Rates and Post-IPO Performance STE-WP-23

Researchers
Yishay Yafeh
Cite As:
Yafeh Yishay . Can Venture Capital Funds Pick Winners? Evidence from Pre-IPO Survival Rates and Post-IPO Performance STE-WP-23 Haifa Israel: Samuel Neaman Institute, 2004. https://www.neaman.org.il/EN/Evidence-Pre-IPO-Survival-Rates-Post-IPO-Performance-STE-WP-23
Download files:
STE23.pdf(298KB)

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.

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