Cost of experimentation and the evolution of venture capital

• 成果类型: Article
• 署名作者: Ewens, Michael; Nanda, Ramana; Rhodes-Kropf, Matthew
• 署名单位: California Institute of Technology; Harvard University; National Bureau of Economic Research; Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2018.03.001
• 发表日期: 2018
• 页码: 422-442
• 关键词: innovation; venture capital; entrepreneurship; Investing; Abandonment options

摘要

We study how technological shocks to the cost of starting new businesses have led the venture capital model to adapt in fundamental ways over the prior decade. We both document and provide a framework to understand the changes in the investment strategy of venture capitalists (VCs) in recent years - an increased prevalence of a spray and pray investment approach - where investors provide a little funding and limited governance to an increased number of startups that they are more likely to abandon, but where initial experiments significantly inform beliefs about the future potential of the venture. This adaptation and related entry by new financial intermediaries has led to a disproportionate rise in innovations where information on future prospects is revealed quickly and cheaply, and reduced the relative share of innovation in complex technologies where initial experiments cost more and reveal less. (C) 2018 Elsevier B.V. All rights reserved.