Venture Capital Reputation and Post-IPO Performance
Abstract
We examine the association of a venture capital (VC) firm’s reputation with the post-IPO long-run performance of its portfolio firms. We find that one reputation measure, the past market share of VC-backed IPOs, has significant positive associations with an array of long-run firm performance measures. While more reputable VCs initially select better quality firms, more reputable VCs continue to be associated with superior long-run performance even after controlling for VC selectivity. More reputable VCs exhibit more active post-IPO involvement in their portfolio firms, and after controlling for its endogeneity, continued VC involvement has a positive influence on post-IPO firm performance.
CNV Krishnan
- Faculty Director, MSM-Finance Program
- Professor, Banking and Finance
