Liquidity, Technological Opportunities, and the Stage Distribution of Venture Capital Investments. Issue 2 (20th February 2014)

• Record Type: Journal Article
• Authors: Lahr, Henry; Mina, Andrea
• Is Part Of: Financial management. Volume 43:Issue 2(2014:Summer)
• Page Start: 291
• Page End: 325
• Publication Date: 2014-02-20
• Subjects: Corporations -- Finance -- Periodicals; 658.1505
• DOI: 10.1111/fima.12048
• Languages: English
• ISSNs: 0046-3892

Abstract

Abstract : This paper explores the determinants of the stage distribution of European venture capital investments from 1990 to 2011. Consistent with liquidity risk theory, we find that the likelihood of investing in earlier stages increases relative to all private equity investments during liquidity crisis years. While liquidity is the main driver of acquisition investments and, to some extent, of expansion financings, technological opportunities are overall the main driver of early and late stage venture capital investments. In contrast to the dotcom crash, the recent financial crisis negatively affected the relative likelihood of expansion investments, but not of early and late stage investments.