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A dynamic duration approach to venture capital exit

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  • Wong, Yuet-Yee

Abstract

This study explores the extent to which correlated multiple stage funding explains variation in the speed of venture exit. I cast venture capital matches in a multivariate survival setting. I construct a panel of nascent entrepreneurs using SDC Platinum-VentureXpert (1990–2000) and use it to estimate the model. I find significant correlation across funding stages. Market effects is the most important factor in explaining the systematic variation in venture exits, while eliminating unobserved heterogeneity explains about a third of the variation. Conventional estimates that assume venture capital exits being driven by static exposure or by observable factors alone are upward biased.

Suggested Citation

  • Wong, Yuet-Yee, 2024. "A dynamic duration approach to venture capital exit," Finance Research Letters, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:finlet:v:68:y:2024:i:c:s1544612324009619
    DOI: 10.1016/j.frl.2024.105931
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