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Venture Capitalists and COVID-19

Published online by Cambridge University Press:  24 August 2021

Paul Gompers ,
Will Gornall ,
Steven N. Kaplan  and
Ilya A. Strebulaev Open the ORCID record for Ilya A. Strebulaev [Opens in a new window]
Paul Gompers
Affiliation:
Harvard Business School and National Bureau of Economic [email protected]
Will Gornall
Affiliation:
University of British Columbia Sauder School of [email protected]
Steven N. Kaplan
Affiliation:
University of Chicago Booth School of Business and National Bureau of Economic Research [email protected]
Ilya A. Strebulaev*
Affiliation:
Stanford University Graduate School of Business and National Bureau of Economic Research
*
[email protected] (corresponding author)
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Abstract

We survey over 1,000 venture capitalists (VCs) on how the COVID-19 pandemic has affected their decisions and investments. Despite the historical importance of in-person meetings, VCs do not report difficulty finding quality entrepreneurs or major changes in time allocation. They do report difficulty in evaluating deals, more investor-friendly terms, and a decreased investment rate, with about one-sixth of VCs reporting pressure from limited partners to conserve capital. Although aggregate returns are largely unchanged, there is high dispersion both within and across funds. A follow-up survey shows faster-than-expected recovery in deal volume, terms, and returns.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 56 , Issue 7: JFQA Symposium on the Consequences of the COVID-19 Pandemic for Firms and Capital Markets , November 2021 , pp. 2474 - 2499
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

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Footnotes

We thank Patrick Sweeney and Amanda Ying Wang for their research assistance, as well as Michael Ewens (the referee), Jarrad Harford (the editor), Sabrina Howell, Ramana Nanda, and David Robinson for helpful comments and discussion. We thank the Kauffman Fellows Program, Harvard Business School, the Stanford Graduate School of Business, and the University of Chicago Booth School of Business for providing us access to their members and alumni. We thank Jeff Harbach and Collin West of the Kauffman Fellows Program for their help in disseminating the survey. We particularly thank and are very grateful to our survey respondents. Gompers, Kaplan, and Strebulaev have consulted for general partners and limited partners investing in venture capital. Gornall thanks the Social Sciences and Humanities Research Council (SSHRC) and the Centre for Innovative Data in Economics Research (CIDER) for their financial support. Gompers received research support from the Harvard Business School (HBS) Division of Research. Kaplan acknowledges support from the Fama-Miller Center. Strebulaev is grateful for the financial support from the Stanford Graduate School of Business Venture Capital Initiative.

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