• Investment timing and the return on VC backed IPOs

      Manigart, Sophie; Mulier, Klaas; Verplancke, Frederik (2019)
      In this study we explain the returns obtained on venture capital (VC) investments in US companies that go public. Using a unique dataset of 1,921 investor-IPO returns, representing 564 IPOs, we show that later investments result in a higher return. This holds after controlling for observed and unobserved IPO company and VC investor characteristics. This is counterintuitive, as later investments should be less risky compared to early investments. We show that the positive relationship between investment timing and return can be explained by the VC’s reputation and the risk and uncertainty related to the IPO. The higher returns for late investments are obtained by high reputation VCs and on investments in more risky and uncertain IPOs. We exclude other possible explanations, such as IPO ratchets for late investors, exit pressure because of the relatively short VC fund lifespan cycle or by unexpected funding needs before IPO that expropriate early investors.
    • Venture capital internationalization: Synthesis and future research directions

      Devigne, David; Manigart, Sophie; Vanacker, Tom; Mulier, Klaas (Journal of Economic Surveys, 2018)
      Research on venture capital (VC) internationalization has expanded rapidly over the last decade. This paper reviews the extant literature on VC internationalization and highlights gaps in our knowledge. We identify three major research streams within this literature, which revolve around the following questions: (1) which VC firms invest across borders and what countries do they target; (2) how do VC firms address liabilities of foreign investing; and (3) what are the real effects of international VC investments? We provide an overview of the contributions in these research streams, discuss the role of public policy, and suggest avenues for future research. Specifically, we call for a deeper understanding of: (1) the functioning and impact of VC firms’ modes of internationalization; (2) micro-level processes such as the functioning and decision making of international investment committees, or the development of international human and social capital; (3) the role of country institutions in VC internationalization and its real effects; and (4) the interplay of international VC with alternative financing sources.