Venture Capital and Firm Performance Over the Long-Run: Evidence from High-Tech IPOs in the United States

Abstract

Despite widespread interest in the key role that venture capital plays in financing young, high-tech firms, little is known about the relative performance of venture-backed firms over the long-run. Using data from the U.S. high-tech sector, this paper examines the performance and financing of venture- and non-venture-backed firms during the decade following their IPO. Venture-backed firms survive longer, grow faster, are more R&D intensive, have generally superior operating performance, raise more external equity, and have a greater cumulative impact on the U.S. high-tech sector. These findings suggest that the true legacy of venture capital finance extends well beyond the IPO.