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Premature listing and post-IPO venture capital refinancing

Author

Listed:
  • Anup Basnet
  • Douglas Cumming
  • Magnus Blomkvist

    (Audencia Business School)

Abstract

We examine why venture capital firms reinvest in portfolio companies also after the IPO. Companies are taken public earlier than optimal, resulting in lower post-IPO returns, and a greater likelihood of, and shorter time to, the first post-IPO VC refinancing.

Suggested Citation

  • Anup Basnet & Douglas Cumming & Magnus Blomkvist, 2022. "Premature listing and post-IPO venture capital refinancing," Post-Print hal-03672114, HAL.
    • Handle: RePEc:hal:journl:hal-03672114
    DOI: 10.1016/j.econlet.2022.110582
    Note: View the original document on HAL open archive server: https://hal.science/hal-03672114
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    References listed on IDEAS

    as
    1. Lukas Koenig & Hans-Peter Burghof, 2022. "The Investment Style Drift Puzzle and Risk-Taking in Venture Capital," Review of Corporate Finance, now publishers, vol. 2(3), pages 527-585, December.
    2. Piotroski, Joseph D. & Zhang, Tianyu, 2014. "Politicians and the IPO decision: The impact of impending political promotions on IPO activity in China," Journal of Financial Economics, Elsevier, vol. 111(1), pages 111-136.
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    4. Barg, Johannes A. & Drobetz, Wolfgang & Momtaz, Paul P., 2021. "Valuing start-up firms: A reverse-engineering approach for fair-value multiples from venture capital transactions," Finance Research Letters, Elsevier, vol. 43(C).
    5. Nahata, Rajarishi, 2008. "Venture capital reputation and investment performance," Journal of Financial Economics, Elsevier, vol. 90(2), pages 127-151, November.
    6. Peter Iliev & Michelle Lowry, 2020. "Venturing beyond the IPO: Financing of Newly Public Firms by Venture Capitalists," Journal of Finance, American Finance Association, vol. 75(3), pages 1527-1577, June.
    7. Gompers, Paul A., 1996. "Grandstanding in the venture capital industry," Journal of Financial Economics, Elsevier, vol. 42(1), pages 133-156, September.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Holding period; IPOs; Pre-mature listing; Refinancing; Venture capital JEL Classification: G24; G32;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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