NBER

Sampsa Samila

IESE Business School
Av Pearson 21
08034 Barcelona
Spain

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: IESE Business School

NBER Working Papers and Publications

August 2018The Persistent Effect of Initial Success: Evidence from Venture Capital
with Ramana Nanda, Olav Sorenson: w24887
We use investment-level data to study performance persistence in venture capital (VC). Consistent with prior studies, we find that each additional IPO among a VC firm's first ten investments predicts as much as an 8% higher IPO rate on its subsequent investments, though this effect erodes with time. In exploring its sources, we document several additional facts: successful outcomes stem in large part from investing in the right places at the right times; VC firms do not persist in their ability to choose the right places and times to invest; but early success does lead to investing in later rounds and in larger syndicates. This pattern of results seems most consistent with the idea that initial success improves access to deal flow. That preferential access raises the quality of subsequent ...

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