[ { "id": "https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/93j1g-0rd67", "eprint_id": 117881, "eprint_status": "archive", "datestamp": "2023-08-22 18:03:56", "lastmod": "2023-10-23 20:13:10", "type": "article", "metadata_visibility": "show", "creators": { "items": [ { "id": "Ewens-M", "name": { "family": "Ewens", "given": "Michael" } }, { "id": "Farre-Mensa-Joan", "name": { "family": "Farre-Mensa", "given": "Joan" }, "orcid": "0000-0003-0401-9107" } ] }, "title": "Private or Public Equity? The Evolving Entrepreneurial Finance Landscape", "ispublished": "pub", "full_text_status": "public", "keywords": "Economics and Econometrics; Finance", "note": "We thank Minmo Gahng, Oleg Gredil, and Jay Ritter for generously sharing data. Kexin Feng provided excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.", "abstract": "The US entrepreneurial finance market has changed dramatically over the last two decades. Entrepreneurs who raise their first round of venture capital retain 30% more equity in their firm and are more likely to control their board of directors. Late-stage start-ups are raising larger amounts of capital in the private markets from a growing pool of traditional and new investors. These private market changes have coincided with a sharp decline in the number of firms going public\u2014and when firms do go public, they are older and have raised more private capital. To understand these facts, we provide a systematic description of the differences between private and public firms. Next, we review several regulatory, technological, and competitive changes affecting both start-ups and investors that help explain how the trade-offs between going public and staying private have changed. We conclude by listing several open research questions.", "date": "2022-11", "date_type": "published", "publication": "Annual Review of Financial Economics", "volume": "14", "publisher": "Annual Reviews", "pagerange": "271-293", "id_number": "CaltechAUTHORS:20221115-640640900.4", "issn": "1941-1367", "official_url": "https://resolver.caltech.edu/CaltechAUTHORS:20221115-640640900.4", "rights": "No commercial reproduction, distribution, display or performance rights in this work are provided.", "doi": "10.1146/annurev-financial-101821-121115", "resource_type": "article", "pub_year": "2022", "author_list": "Ewens, Michael and Farre-Mensa, Joan" }, { "id": "https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/3vm47-f4r11", "eprint_id": 103419, "eprint_status": "archive", "datestamp": "2023-08-20 00:31:13", "lastmod": "2023-10-20 23:00:40", "type": "article", "metadata_visibility": "show", "creators": { "items": [ { "id": "Ewens-M", "name": { "family": "Ewens", "given": "Michael" } }, { "id": "Farre-Mensa-Joan", "name": { "family": "Farre-Mensa", "given": "Joan" } } ] }, "title": "The Deregulation of the Private Equity Markets and the Decline in IPOs", "ispublished": "pub", "full_text_status": "public", "note": "\u00a9 The Author(s) 2020. Published by Oxford University Press on behalf of The Society for Financial Studies. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model). \n\nReceived: 08 March 2018; Published: 09 May 2020; Published: 09 May 2020. \n\nWe thank Jay Fishman, Will Gornall, Matthew Gustafson, Peter Iliev, Andrew Karolyi (the Editor), Stephen Karolyi, Stephen Keen, Sungjoung Kwon, Josh Lerner, Bob Long, Michelle Lowry, Michael Mani, John Morley, Ramana Nanda, Jay Ritter, Roberta Romano, Berk Sensoy, two anonymous referees, and audiences at the AEA Conference, the WFA Conference, the Jackson Hole Finance Conference, UC Berkeley's Finance and Innovation Conference, the Finance, Organizations and Markets (FOM) Research Conference, the Institute for Private Capital Spring Research Symposium, the Washington University Corporate Finance Conference, ESMT's 2nd Conference on Entrepreneurial Financial Management, the Securities and Exchange Commission, and several universities. We also thank Correlation Ventures and VentureSource for access to data, as well as Aleksandar Andonov, Yael Hochberg, and Joshua Rauh for their data on the composition of state pension fund boards. The VentureSource data were provided by Correlation Ventures, to which Ewens is an advisor and investor.\n\n
Submitted - SSRN-id3017610.pdf
Supplemental Material - hhaa053_supplementary-data.pdf
", "abstract": "The deregulation of securities laws\u2014in particular the National Securities Markets Improvement Act (NSMIA) of 1996\u2014has increased the supply of private capital to late-stage private startups, which are now able to grow to a size that few private firms used to reach. NSMIA is one of a number of factors that have changed the going-public versus staying-private trade-off, helping bring about a new equilibrium where fewer startups go public, and those that do are older. This new equilibrium does not reflect an initial public offering (IPO) market failure. Rather, founders are using their increased bargaining power vis-\u00e0-vis investors to stay private longer.", "date": "2020-12", "date_type": "published", "publication": "Review of Financial Studies", "volume": "33", "number": "12", "publisher": "Oxford University Press", "pagerange": "5463-5509", "id_number": "CaltechAUTHORS:20200522-122829220", "issn": "0893-9454", "official_url": "https://resolver.caltech.edu/CaltechAUTHORS:20200522-122829220", "rights": "No commercial reproduction, distribution, display or performance rights in this work are provided.", "doi": "10.1093/rfs/hhaa053", "primary_object": { "basename": "SSRN-id3017610.pdf", "url": "https://authors.library.caltech.edu/records/3vm47-f4r11/files/SSRN-id3017610.pdf" }, "related_objects": [ { "basename": "hhaa053_supplementary-data.pdf", "url": "https://authors.library.caltech.edu/records/3vm47-f4r11/files/hhaa053_supplementary-data.pdf" } ], "resource_type": "article", "pub_year": "2020", "author_list": "Ewens, Michael and Farre-Mensa, Joan" }, { "id": "https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/dtstb-tts79", "eprint_id": 83268, "eprint_status": "archive", "datestamp": "2023-08-22 04:06:57", "lastmod": "2023-10-23 16:14:43", "type": "article", "metadata_visibility": "show", "creators": { "items": [ { "id": "Ewens-M", "name": { "family": "Ewens", "given": "Michael" } }, { "id": "Townsend-R-R", "name": { "family": "Townsend", "given": "Richard R." } } ] }, "title": "Are Early Stage Investors Biased Against Women?", "ispublished": "pub", "full_text_status": "public", "keywords": "Gender gap; entrepreneurship; angel investors; bias", "note": "\u00a9 2019 Published by Elsevier B.V. \n\nReceived 27 April 2018, Revised 30 October 2018, Accepted 17 November 2018, Available online 11 July 2019. \n\nWe are grateful to G. William Schwert (the editor), an anonymous referee, Tania Babina, Shai Bernstein, Anusha Chari, Juanita Gonzales-Uribe, Sabrina Howell, Arthur Korteweg, Ramana Nanda, David Neumark, and Sahil Raina for helpful comments. We also thank seminar participants at the American Finance Association 2017 annual meeting, Arizona State University, Caltech, HEC Paris workshop on Entrepreneurship and Development, Kauffman Emerging Scholars Conference, Kenan Institute Frontiers of Entrepreneurship Conference, LBS Private Equity Symposium, NBER Entrepreneurship, Norwegian School of Economics, Napa Conference on Financial Markets Research, and UC Irvine for helpful comments. We are especially grateful to Kevin Laws of AngelList for graciously providing the data. Townsend recognizes financial support from the Kauffman Foundation.\n\nSubmitted - SSRN-id2953011.pdf
", "abstract": "We study whether early stage investors have gender biases using a proprietary data set from AngelList that allows us to observe private interactions between investors and fundraising startups. We find that male investors express less interest in female entrepreneurs compared to observably similar male entrepreneurs. In contrast, female investors express more interest in female entrepreneurs. These findings do not appear to be driven by within-gender screening/monitoring advantages or gender differences in risk preferences. Moreover, the male-led startups that male investors express interest in do not outperform the female-led startups they express interest in\u2014they underperform. Overall, the evidence is consistent with gender biases.", "date": "2020-03", "date_type": "published", "publication": "Journal of Financial Economics", "volume": "135", "number": "3", "publisher": "Elsevier", "pagerange": "653-677", "id_number": "CaltechAUTHORS:20171116-152128725", "issn": "0304-405X", "official_url": "https://resolver.caltech.edu/CaltechAUTHORS:20171116-152128725", "rights": "No commercial reproduction, distribution, display or performance rights in this work are provided.", "funders": { "items": [ { "agency": "Kauffman Foundation" } ] }, "doi": "10.1016/j.jfineco.2019.07.002", "primary_object": { "basename": "SSRN-id2953011.pdf", "url": "https://authors.library.caltech.edu/records/dtstb-tts79/files/SSRN-id2953011.pdf" }, "resource_type": "article", "pub_year": "2020", "author_list": "Ewens, Michael and Townsend, Richard R." }, { "id": "https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/b9bqf-7hs04", "eprint_id": 85535, "eprint_status": "archive", "datestamp": "2023-08-21 23:25:19", "lastmod": "2023-10-18 18:18:35", "type": "article", "metadata_visibility": "show", "creators": { "items": [ { "id": "Ewens-M", "name": { "family": "Ewens", "given": "Michael" } }, { "id": "Nanda-R", "name": { "family": "Nanda", "given": "Ramana" } }, { "id": "Rhodes-Kropf-M", "name": { "family": "Rhodes-Kropf", "given": "Matthew" } } ] }, "title": "Cost of Experimentation and the Evolution of Venture Capital", "ispublished": "pub", "full_text_status": "public", "keywords": "Innovation; Venture Capital; Entrepreneurship; Investing; Abandonment Options", "note": "\u00a9 2018 Elsevier B.V. \n\nReceived 11 October 2016, Revised 15 February 2017, Accepted 15 March 2017, Available online 27 March 2018. \n\nWe are extremely grateful to Shai Bernstein, Tony Cookson, Marco Da Rin, Lora Dimitrova, Joan Farre-Mensa, Brent Goldfarb, Yael Hochberg, David Hsu, Ross Levine, Tom Nicholas, Scott Stern, Ayako Yasuda and the participants at the NBER conference on The Changing Financing Market for Innovation and Entrepreneurship, the Academy of Management, the 5th HEC Entrepreneurship Workshop, the Economics of Strategy Workshop at NYU, the 5th Entrepreneurial Finance and Innovation Conference, Western Finance Association 2016, European Finance Assoc. 2016, FOM Conference 2016, UC Berkeley, Caltech, Carnegie Mellon University, Columbia University, Arizona State University, Drexel University, Boston University, University of Rochester, University of Michigan, Oxford University and Vanderbilt University for helpful comments. The authors thank VentureSource and Correlation Ventures for access to their data. Ewens and Rhodes-Kropf are advisors to and investors in Correlation Ventures. Ewens recognizes the support of the Kauffman Foundation Junior Faculty Fellowship. All errors are our own.", "abstract": "We study how technological shocks to the cost of starting new businesses have led the venture capital model to adapt in fundamental ways over the prior decade. We both document and provide a framework to understand the changes in the investment strategy of venture capitalists (VCs) in recent years \u2014 an increased prevalence of a \"spray and pray\" investment approach \u2014 where investors provide a little funding and limited governance to an increased number of startups that they are more likely to abandon, but where initial experiments significantly inform beliefs about the future potential of the venture. This adaptation and related entry by new financial intermediaries has led to a disproportionate rise in innovations where information on future prospects is revealed quickly and cheaply, and reduced the relative share of innovation in complex technologies where initial experiments cost more and reveal less.", "date": "2018-06", "date_type": "published", "publication": "Journal of Financial Economics", "volume": "128", "number": "3", "publisher": "Elsevier", "pagerange": "422-442", "id_number": "CaltechAUTHORS:20180330-124840950", "issn": "0304-405X", "official_url": "https://resolver.caltech.edu/CaltechAUTHORS:20180330-124840950", "rights": "No commercial reproduction, distribution, display or performance rights in this work are provided.", "doi": "10.1016/j.jfineco.2018.03.001", "resource_type": "article", "pub_year": "2018", "author_list": "Ewens, Michael; Nanda, Ramana; et el." }, { "id": "https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/mpr9v-6db95", "eprint_id": 89028, "eprint_status": "archive", "datestamp": "2023-08-21 23:28:59", "lastmod": "2023-10-18 22:28:05", "type": "article", "metadata_visibility": "show", "creators": { "items": [ { "id": "Chakraborty-I", "name": { "family": "Chakraborty", "given": "Indraneel" } }, { "id": "Ewens-M", "name": { "family": "Ewens", "given": "Michael" } } ] }, "title": "Managing Performance Signals Through Delay: Evidence from Venture Capital", "ispublished": "pub", "full_text_status": "public", "keywords": "venture capital; reputation; financial intermediation; entrepreneurship", "note": "\u00a9 2018 INFORMS. \n\nReceived: October 12, 2015. Revised: July 20, 2016. Accepted: September 7, 2016. Published Online in Articles in Advance: March 3, 2017. \n\nHistory: Accepted by Gustavo Manso, finance. \n\nFor helpful comments and discussions, the authors thank Gustavo Manso (department editor); an anonymous associate editor; two anonymous referees; and Shai Bernstein, Sudheer Chava, Thomas Chemmanur, Marco Da Rin, Arthur Korteweg, Andrew MacKinlay, Debarshi Nandy, Manju Puri, Evan Rawley, Matthew Rhodes-Kropf, David Robinson, Ilya Strebulaev; and seminar participants at the 5th HEC Workshop on Entrepreneurship, Carnegie Mellon University, Stanford Graduate School of Business, and the 5th Entrepreneurial Finance and Innovation Conference. The authors are grateful to VentureSource and Correlation Ventures for access to data. M. Ewens recognizes the financial support of the Kauffman Junior Faculty Fellowship. M. Ewens is an advisor to, and investor in, Correlation Ventures.\n\nSupplemental Material - mnsc.2016.2662-sm.pdf
", "abstract": "This paper examines whether agency conflicts during venture capital (VC) fundraising impact investment behavior. Using novel investment-level decisions of VCs in the process of raising new funds, we find that venture capitalists take actions hidden from their investors\u2014i.e., limited partners (LPs)\u2014that delay revealing negative information about VC fund performance until after a new fund is raised. After fundraising is complete, write-offs double and reinvestments in relatively worse-off entrepreneurial firms increase. We find that these observations cannot be explained by strategic bundling of news or effort constraints due to the newly raised fund. Funds with both long and short fundraising track record exhibit this behavior and the delay is costly for fund investors (LPs). This strategic delay shows that fundraising incentives have real impacts on VC fund investment decisions, which are often difficult for LPs to observe.", "date": "2018-06", "date_type": "published", "publication": "Management Science", "volume": "64", "number": "6", "publisher": "INFORMS", "pagerange": "2875-2900", "id_number": "CaltechAUTHORS:20180822-111107478", "issn": "0025-1909", "official_url": "https://resolver.caltech.edu/CaltechAUTHORS:20180822-111107478", "rights": "No commercial reproduction, distribution, display or performance rights in this work are provided.", "funders": { "items": [ { "agency": "Kauffman Junior Faculty Fellowship" } ] }, "doi": "10.1287/mnsc.2016.2662", "primary_object": { "basename": "mnsc.2016.2662-sm.pdf", "url": "https://authors.library.caltech.edu/records/mpr9v-6db95/files/mnsc.2016.2662-sm.pdf" }, "resource_type": "article", "pub_year": "2018", "author_list": "Chakraborty, Indraneel and Ewens, Michael" }, { "id": "https://authors.library.caltech.eduhttps://authors.library.caltech.edu/records/23yqx-fre12", "eprint_id": 85363, "eprint_status": "archive", "datestamp": "2023-08-19 08:39:01", "lastmod": "2023-10-18 18:09:15", "type": "article", "metadata_visibility": "show", "creators": { "items": [ { "id": "Ewens-M", "name": { "family": "Ewens", "given": "Michael" } }, { "id": "Marx-M", "name": { "family": "Marx", "given": "Matt" } } ] }, "title": "Founder Replacement and Startup Performance", "ispublished": "pub", "full_text_status": "public", "note": "\u00a9 2017 The Author. Published by Oxford University Press on behalf of The Society for Financial Studies. \n\nReceived January 16, 2016; editorial decision August 3, 2017 by Editor Francesca Cornelli. \n\nWe recognize the support of the Kauffman Junior Faculty Fellowship. We thank John Bauer, Russell Beck, David Denis, and Matthew Rhodes-Kropf; the participants at the Duke Strategy Conference, Duke Finance department, Georgia Tech strategy department, the Northeastern entrepreneurship department; and the NBER Entrepreneurship Working Group for their comments. The VentureSource data were provided by Correlation Ventures, to which Ewens is an advisor and investor.\n\nSupplemental Material - hhx130_supp.pdf
", "abstract": "We provide causal evidence that venture capitalists (VCs) improve the performance of their portfolio companies by replacing founders. Using a database of venture capital financings augmented with hand-collected founder turnover events, we exploit shocks to the supply of outside executives via 14 states' changes to non-compete laws from 1995 to 2016. Naive regressions of startup performance on replacement suggest a negative correlation that may reflect negative selection. Indeed, instrumented regressions reverse the sign of this effect, suggesting that founder replacement instead improves performance. The evidence points to the replacement of founders as a specific mechanism by which VCs add value.", "date": "2018-04-01", "date_type": "published", "publication": "Review of Financial Studies", "volume": "31", "number": "4", "publisher": "Oxford University Press", "pagerange": "1532-1565", "id_number": "CaltechAUTHORS:20180319-140841345", "issn": "0893-9454", "official_url": "https://resolver.caltech.edu/CaltechAUTHORS:20180319-140841345", "rights": "No commercial reproduction, distribution, display or performance rights in this work are provided.", "funders": { "items": [ { "agency": "Kauffman Junior Faculty Fellowship" } ] }, "doi": "10.1093/rfs/hhx130", "primary_object": { "basename": "hhx130_supp.pdf", "url": "https://authors.library.caltech.edu/records/23yqx-fre12/files/hhx130_supp.pdf" }, "resource_type": "article", "pub_year": "2018", "author_list": "Ewens, Michael and Marx, Matt" } ]