Get access

Venture Capital Investment Duration


  • Douglas Cumming is an associate professor and Ontario research chair at the Schulich School of Business, York University.

  • Sofia Johan is an AFM senior research fellow at the Tilburg Law and Economics Centre (TILEC), University of Tilburg.

  • An earlier version of this paper was distributed as “When do companies go public too early? International evidence from venture capital” at the Academy of Management Conference 2007.

Douglas Cumming, Schulich School of Business, York University, 4700 Keele Street, Toronto, ON, Canada M3J 1P3. E-mail:


This paper examines cross-country evidence on the duration of venture capital (VC) investment. We formulate a theory of VC investment duration based on the idea that venture capitalists exit when the expected marginal cost of maintaining the investment is greater than the expected marginal benefit, and thereby relate VC investment duration to entrepreneurial firm characteristics, investor characteristics, deal characteristics, and institutional and market conditions. VC investment duration data in Canada and the United States lend strong support to the theoretical predictions developed herein.