We empirically examine the interaction between diferent types of diversifcation (stage, industry, geography) and portfolio size, i.e., number of investee companies, in explaining venture capital (VC) funds’ returns. We study a comprehensive dataset of 422 liquidated US VC funds to conduct multiple analyses in a large timeframe. The results show that large portfolio size and diversifcation in a limited number of industries contribute positively to fund performance, while stage and geographical diversifcation have no signifcant relationship with returns. Our fndings can support both the practice of VC portfolio management in reaching better capital allocation efciency and policymakers in providing guidance for VC fund development programmes backed by sovereign and international institutions.
Diversification and Size in Venture Capital Investing
DELL'ACQUA A;
2024-01-01
Abstract
We empirically examine the interaction between diferent types of diversifcation (stage, industry, geography) and portfolio size, i.e., number of investee companies, in explaining venture capital (VC) funds’ returns. We study a comprehensive dataset of 422 liquidated US VC funds to conduct multiple analyses in a large timeframe. The results show that large portfolio size and diversifcation in a limited number of industries contribute positively to fund performance, while stage and geographical diversifcation have no signifcant relationship with returns. Our fndings can support both the practice of VC portfolio management in reaching better capital allocation efciency and policymakers in providing guidance for VC fund development programmes backed by sovereign and international institutions.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
