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Ipos Of Venture Capital Backed Ventures
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Book Synopsis IPOs of Venture Capital Backed Ventures by : Christian Mehrer
Download or read book IPOs of Venture Capital Backed Ventures written by Christian Mehrer and published by GRIN Verlag. This book was released on 2003-11-02 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Studienarbeit aus dem Jahr 2002 im Fachbereich BWL - Investition und Finanzierung, Note: 1,3, European Business School - Internationale Universität Schloß Reichartshausen Oestrich-Winkel (-), Veranstaltung: Seminar des Wahlpflichtfaches Finanzierung und Banken, Sprache: Deutsch, Abstract: The topic of this paper is the difference of venture capital (VC) backed initial public offerings (IPOs) and non backed IPOs and the share price performance of the companies after the IPO. Compared to non-backed IPOs, VC backed IPOs consist on average of younger and less profitable firms. Nevertheless, VC backed companies have better underwriters, more institutional investors and less underpricing (i.e. a discount on the initial share price due to asymmetrical information). It is therefore considered that the venture capitalist (VCist) has an important impact on the share price performance of the young firm due to his certification role. By screening and mentoring the backed venture in earlier stages of the VC cycle, he can well assess the business’ opportunities. Thus, if he invests in the venture and keeps shares after the IPO, he can proof credibility to other investors (credibility hypothesis). However, younger VCists tend to bring companies too quickly to the stock markets, because they need an IPO for building up a reputation (grandstanding hypothesis). This may be adverse to the venture. Our findings also outline that there is no clear advantage of VC-backed firms on the long-run. Thus, we conclude that it is not only important to think about a VC backing, but also about the VCist that is backing. Choosing the wrong VCist may even have a negative impact on the company’s future.
Book Synopsis The Price of Rapid Exit in Venture Capital-Backed Ipos by : Silvia Rossetto
Download or read book The Price of Rapid Exit in Venture Capital-Backed Ipos written by Silvia Rossetto and published by . This book was released on 2006 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper proposes an explanation for two empirical puzzles surrounding initial public offerings (IPOs). Firstly, it is well documented that IPO underpricing increases during quot;hot issuequot; periods. Secondly, venture capital (VC) backed IPOs are less underpriced than non venture capital backed IPOs during normal periods of activity, but the reverse is true during hot issue periods: VC backed IPOs are more underpriced than non VC backed ones. This paper shows that when IPOs are driven by the initial investor's desire to exit from an existing investment in order to finance a new venture, both the value of the new venture and the value of the existing firm to be sold in the IPO can be partially signalled by the investor's choice of price and fraction of shares sold in the IPO. When this is the case, the availability of attractive new ventures increases equilibrium underpricing, which is what we observe during hot issue periods. Moreover, I show that underpricing is affected by the severity of the moral hazard problem between an investor and the firm's manager. In the presence of a moral hazard problem the degree of equilibrium underpricing is more sensitive to changes in the value of the new venture. This can explain why venture capitalists, who often finance firms with more severe moral hazard problems, underprice IPOs less in normal periods, but underprice more strongly during hot issue periods. Further empirical implications relating the fraction of shares sold and the degree of underpricing are presented.
Book Synopsis Post-Ipo Performance and the Exit of Venture Capitalists by : Tilo Kraus
Download or read book Post-Ipo Performance and the Exit of Venture Capitalists written by Tilo Kraus and published by . This book was released on 2003 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We test several implications of venture capital investment for the post-IPO performance of firms using data of 312 IPOs on Germany's Neuer Markt. Through tighter corporate control, third party certification and a reduced heterogeneity of opinions companies financed by Venture Capital firms might outperform their counterparties in the aftermarket of an IPO. However, this positive effect of VC backing on aftermarket performance could be reversed when Venture Capitalists seek exit from their investment. The discontinuation of a blockholder's exercised corporate control, signalling of insider knowledge as well as possible downward sloping demand curves provide an analytical framework that explains why the return series of VC backed IPOs might show a significant breakpoint at the time when Venture Capitalists exit from their investments. Our empirical evidence suggests that the expiration of lock-up periods as the earliest possible point of time for an exit represents such as breakpoint as Venture Capital backed IPOs outperform their counterparts before, but underperform around and after the expiration.
Book Synopsis How Venture Capital Works by : Phillip Ryan
Download or read book How Venture Capital Works written by Phillip Ryan and published by The Rosen Publishing Group, Inc. This book was released on 2012-07-01 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt: Explanations to the inner workings of one of the least understood, but arguably most important, areas of business finance is offered to readers in this engaging volume: venture capital. Venture capitalists provide necessary investment to seed (or startup) companies, but the startup is only the beginning, there is much more to be explored. These savvy investors help guide young entrepreneurs, who likely have little experience, to turn their businesses into the Googles, Facebooks, and Groupons of the world. This book explains the often-complex methods venture capitalists use to value companies and to get the most return on their investments, or ROI. This book is a must-have for any reader interested in the business world.
Book Synopsis The Performance and Relationship Between Venture Capitalists and Venture-capital-backed IPOs by : Tieh Shang Jin
Download or read book The Performance and Relationship Between Venture Capitalists and Venture-capital-backed IPOs written by Tieh Shang Jin and published by . This book was released on 2008 with total page 388 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Acquisition and IPO Strategies for VC-backed Companies by :
Download or read book Acquisition and IPO Strategies for VC-backed Companies written by and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides insider's perspectives on the best practices for venture capitalists who are pursuing an exit. The essays discuss the internal and external factors in timing an exit, as well as strategies for evaluating potential profitability.
Book Synopsis Venture-Backed Ipos by : Tereza Tykvova
Download or read book Venture-Backed Ipos written by Tereza Tykvova and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze the venture capitalist's decision on the timing of the IPO, the offer price and the fraction of shares he sells in the course of the IPO. Under certain assumptions about the parameters and the structure of the model, we obtain a single equilibrium in which high-quality firms separate from low-quality firms. The latter are liquidated after the first period, while the former go public either after having been financed by the venture capitalist for two periods or after one financing period using a lock-up.
Book Synopsis The Role of Venture Capital Backing in Initial Public Offerings by : Thomas J. Chemmanur
Download or read book The Role of Venture Capital Backing in Initial Public Offerings written by Thomas J. Chemmanur and published by . This book was released on 2009 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: We empirically distinguish between three possible roles of venture backing in IPOs: certification, where venture-backed IPOs are priced closer to intrinsic firm value than non-venture backed IPOs due to venture capitalists' concern for their reputation; screening and monitoring, where VCs are able to either select better quality firms to back (screening), or help create such higher quality firms by adding value to them (monitoring) in the pre-IPO stage; and market power, where venture capitalists attract a greater number and higher quality of market participants such as underwriters, institutional investors, and analysts to an IPO, thus obtaining a higher valuation for the IPOs of firms backed by them. We argue that IPO underpricing is not the most appropriate measure to evaluate the role of venture backing in IPOs. Instead, we compare four sets of more direct measures between VC backed and non-VC backed (and between high-reputation VC backed and low-reputation VC backed) IPOs. The evidence strongly rejects the certification hypothesis, while finding considerable support for the market power hypothesis and some support for the screening and monitoring hypothesis. We find that venture capitalists attract higher quality market participants to the IPOs of firms backed by them, thus increasing the heterogeneity in investor beliefs about these firms, resulting in higher valuations for the equity of these firms (both in the IPO and in the secondary market immediately following the IPO).
Book Synopsis Venture Capital and Initial Public Offering by : Weicheng Wang
Download or read book Venture Capital and Initial Public Offering written by Weicheng Wang and published by . This book was released on 2010 with total page 99 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Patents, Innovation, and Performance of Venture Capital-backed IPOs by : Jerry Cao
Download or read book Patents, Innovation, and Performance of Venture Capital-backed IPOs written by Jerry Cao and published by . This book was released on 2015 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the predictive power of patents on the long-run performance of venture capital (VC)-backed initial public offerings (IPOs). We show that VC-backed IPOs that have at least one patent at the time of the IPO substantially outperform other VC-backed IPOs, with 3-year buy-and-hold market-adjusted returns of -7.1% vs. -23.3%. On average, VC-backed IPOs without patents perform similarly to non-VC-backed IPOs. We also report that VC-backed IPOs from 1981-1998 outperformed other IPOs, but the pattern has reversed for IPOs from 1999-2006. Although a smaller proportion of non-VC-backed IPOs possess patents, those with patents also outperform those without patents.
Book Synopsis The Reality of IPO Performance by : Yochanan Shachmurove
Download or read book The Reality of IPO Performance written by Yochanan Shachmurove and published by . This book was released on 2013 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: The incredible profits of Initial Public Offerings have often been emphasized in the media as a popular investment for the public. This paper takes a few steps towards refuting such an assertion by investigating the performance of 2,895 venture capital backed IPOs between 1968 and September 1998. The paper finds that it is incorrect to assume that investors demand very high annualized and cumulative rates of return to compensate for the risks they are taking by financing ventures in different sectors of the economy. The mean rates of return are found to be, in practice, very moderate, and often, negative.
Book Synopsis The performance of venture capital funds and VC-backed IPOs by : Stanley Lou Weng Hong
Download or read book The performance of venture capital funds and VC-backed IPOs written by Stanley Lou Weng Hong and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Underpricing and Stock Market Performance of Venture Capital Backed IPO by : 林璟如
Download or read book Underpricing and Stock Market Performance of Venture Capital Backed IPO written by 林璟如 and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Decline in Venture-Backed IPOs by : Susan Chaplinsky
Download or read book The Decline in Venture-Backed IPOs written by Susan Chaplinsky and published by . This book was released on 2013 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: The decline in initial public offerings (IPOs) has raised concerns about the vitality of the venture capital industry. We examine capital recovery in the VC industry using returns for 1,215 M&A and 1,401 IPO exits from U.S. based venture-backed companies during 1985 to 2008. We find that mean and median returns for IPO exits are significantly higher than M&A exits, with the median M&A exit having a negative return. A decomposition of returns into its fundamental components - investor stakes, capital allocated to portfolio companies (money-in), and capital recovered from portfolio companies (money-out) - shows that returns are five times more sensitive to money-in than money-out, with more disciplined capital allocation being especially important for generating high M&A returns. In all market conditions, IPOs have average exit returns in excess of 125% whereas M&A returns are lower and exhibit more variation. Taken together, the results suggest that it is more difficult to achieve outsized returns from M&A than IPO exits. For the industry as a whole, the dollars realized from M&A exits do not keep pace with their growth as a proportion of total exits over time. Increasing numbers of exits must be produced to recover the total capital at risk, suggesting that industry concerns about a decline in IPO exits and their likely higher capital recovery are well-founded.
Book Synopsis Earnings Growth and Underpricing with Venture Capitalist Backed Initial Public Offerings by : Elke J.E. Klaassen
Download or read book Earnings Growth and Underpricing with Venture Capitalist Backed Initial Public Offerings written by Elke J.E. Klaassen and published by . This book was released on 2007 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: The literature on the certification role of venture capitalists in initial public offerings (IPOs) is mixed and quite often no significant effect is found. Similarly, we find no significant effect of venture capitalists on IPO-underpricing in The Netherlands, if we study the impact of venture capitalists on all IPOs. However, underpricing is affected positively in venture capital backed companies that exhibit large net earnings growth and negatively in venture capital backed companies that exhibit small net earnings growth. The large underpricing of large net earnings growth companies suggests that informed insiders are not impressed by past net earnings of venture capital backed IPOs, but that past net earnings growth attracts less informed investors to bid fiercely for the shares after the IPO.
Book Synopsis Venture Capital and the Finance of Innovation by : Andrew Metrick
Download or read book Venture Capital and the Finance of Innovation written by Andrew Metrick and published by John Wiley and Sons. This book was released on 2011-06-15 with total page 1153 pages. Available in PDF, EPUB and Kindle. Book excerpt: This useful guide walks venture capitalists through the principles of finance and the financial models that underlie venture capital decisions. It presents a new unified treatment of investment decision making and mark-to-market valuation. The discussions of risk-return and cost-of-capital calculations have been updated with the latest information. The most current industry data is included to demonstrate large changes in venture capital investments since 1999. The coverage of the real-options methodology has also been streamlined and includes new connections to venture capital valuation. In addition, venture capitalists will find revised information on the reality-check valuation model to allow for greater flexibility in growth assumptions.
Book Synopsis Venture Capitalist Certification in Initial Public Offerings by : Kathleen Weiss Hanley
Download or read book Venture Capitalist Certification in Initial Public Offerings written by Kathleen Weiss Hanley and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides support for the certification role of venture capitalists in initial public offerings. Consistent with the certification hypothesis, a comparison of venture capital backed IPOs with a matched control sample of nonventure capital backed IPOs from 1983 through 1987 matched as closely as possible by industry and offering size indicates that venture capital backing results in significantly lower initial returns and gross spreads. In effect, the presence of venture capitalists in the issuing firms serves to lower the total costs of going public and to maximize the net proceeds to the offering firm. In addition, we document that venture capitalists retain a significant portion of their holdings in the firm after the IPO.
