Venture capital funds and the public equity market


  • The authors thank the two Limited Partners for providing the data, Antoinette Schoar, Josh Lerner, Alexander Ljungqvist and an anonymous referee for their comments and Donna Harris for her research assistance.


This paper considers the relationship between the public equity market and the returns to venture investing using a dataset which is derived from the records of two large limited partners who have been investing in venture capital for almost 30 years. Evidence is found to suggest that market conditions over the investment cycle, and exit conditions at the time of exit in particular, are an important determinant. This paper also investigates whether any other aspects of the venture investment process respond to events in the broader market. While general trends are evident in the venture investment cycle, only the intensity of the investment process is found to respond to events in the public equity market.