Tuck Forum on Private Equity and Venture Capital

Is Private Equity Good for Consumers?

Private equity firms are becoming increasingly entrenched in the day-to-day lives of consumers, acquiring many of our favorite products found on store shelves.  Should consumers care?  What happens to brands under private equity ownership?  These deals often elicit negative reactions.  A common view is that...

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Liquidity Provision in the Secondary Market for Private Equity Fund Stakes

Once marginal due to contractual restrictions on transfers, the secondary market for Private Equity Fund (PEF) stakes took off soon after the 2008 financial crisis to an annual turnover of over $30 billion per year.

Behind this growth are the liquidity needs experienced by some investors since the crisis...

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Squaring Venture Capital Valuations with Reality

Historically, most successful venture capital-backed companies went public within three to eight years of their initial venture capital (VC) funding.

More recently, many successful VC-backed companies have opted to remain private for substantial periods and have grown to enormous size without a public offering. Companies such as...

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Why You Should Consider a “Permanent Capital” Investment Strategy

Much of the capital available to Small and Medium Enterprises (SMEs) around the world is in the form of private equity. Most of this capital is allocated via Private Equity (PE) firms that are generally structured with 10-year terms, and the investment target is 3x to 5x return in 3...

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Decreasing Returns or Reversion to the Mean? The Case of Private Equity Fund Growth

This article analyzes the interaction between the growth and the performance of the two most prominent groups of private equity (PE) funds: buyout funds and venture capital (VC) funds.

These funds are usually structured as closed-end, limited-life vehicles. Therefore, in order to keep earning fees, PE firms...

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Initial Coin Offering and Platform Building

In an initial coin offering (ICO), a company or an open-source project pre-sells a cryptocurrency “coin” (or token) that is redeemable for some product or service to be offered at a later date.

This structure has recently gain tremendous momentum: According to CB Insights, in 2017...

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When Investor Incentives and Consumer Interests Diverge: Private Equity in Higher Education

This paper studies the role of private equity in for-profit higher education.

Private equity and formerly private equity owned schools account for approximately 35 percent of total US for-profit enrollment, which in turn totals more than 2.5 million students per year. Relative to closely-held private firms or diffusely-held publicly...

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Synthetic Peer Benchmarking for Diversified Private Equity Programs

At BlackRock Private Equity Partners we believe that continued innovation of our tools and analytics is imperative in achieving superior risk-adjusted returns and delivering a distinguished and more transparent experience to our investors.     

As a private equity solution provider, most of our investors...

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Venture Capital Investments and Merger and Acquisition Activity around the World

In this paper, we investigate what happens to venture capital investments when M&A activity is regulated.  The paper studies the interaction between venture capital (VC) activity and M&A activity in 40 different countries around the world.     The initial idea for this paper...

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The Economics of PIPEs

Private placements of equity, commonly referred to as “PIPEs,” are an important source of financing for many public corporations. According to PrivateRaise, a leading database on PIPE transactions, between 2001 and 2015, there were 11,296 private placements of common stock by U.S. listed firms that raised $243.9 billion. Firms raising...

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Measuring Institutional Investors’ Skill at Making Private Equity Investments

Institutional investors have become the most important investors in the U.S. economy, controlling more than 70% of the publicly traded equity, much of the debt, and virtually all of the private equity. Their investment decisions have far reaching consequences for their beneficiaries:  universities’ spending decisions, pension plan...

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Fewer and Less Skilled? Human Capital, Competition, and Entrepreneurial Success in Manufacturing

Young firms are considered to be the engines of growth and dynamism in an economy and the United States has long been considered to be a nation of entrepreneurs with the best institutions for young firms to flourish. Recently however, there has been mounting anecdotal evidence and academic research...

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The Deregulation of the Private Equity Markets and the Decline in IPOs

Recent years have seen a sharp decline in the number of initial public offerings (IPOs) in the U.S.

While this decline has garnered considerable attention both in academic and policy circles and in the press, its causes remain unclear (Gao, Ritter, and Zhu (2013); Doidge, Karolyi, and...

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The Remaking of Wall Street

Since the financial crisis of 2007-09, Wall Street has transformed dramatically. Constrained by post crisis regulatory limits, those investment banks surviving as bank holding companies (BHCs) have curtailed their investment banking and other activities. At the same time, private equity firms - among them, Blackstone, KKR, Apollo and Carlyle...

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Cost of Experimentation and the Evolution of Venture Capital

The emergence of the "cloud" has had a major impact on the founding and growth of entrepreneurial firms.  This new technology began with the introduction of Amazon's Web Services in 2006.  It allowed software and internet companies to rent rather than buy powerful computing resources, thus lowering...

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Team Stability and Performance: Evidence from Private Equity

In the paper “Team Stability and Performance: Evidence from Private Equity”, we empirically study the effect of team stability on performance in a team production environment. The effect of team stability on organizations is ambiguous. Stability (or lower turnover) can induce individuals to invest in relationship specific ...

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Financing and New Product Decisions of Private and Publicly Traded Firms

Public Firms Are Increasingly Seeking Out Private Capital.

In our paper “Financing and New Product Decisions of Private and Publicly Traded Firms,” forthcoming in the Review of Financial Studies, we investigate how the financing decisions of firms respond to investment opportunities presented by Medicare NCDs....

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Fostering Entrepreneurship: Promoting Founding or Funding?

Everybody loves Silicon Valley. Imitations can be found worldwide: Silicon Forest (Oregon), Swamp (Florida), Gorge (UK), Glen (Scotland), Fjord (Norway), Wadi (Israel), Savannah (Kenya), and many more. Policy makers, in particular, are eager to foster entrepreneurial ecosystems by promoting entrepreneurship, with the hope to foster economic growth, employment, and...

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Does Economic Insecurity Affect Employee Innovation?

How does employee productivity respond to large shocks to household wealth? Over the past several decades, the annual proportion of households in the U.S. experiencing a severe economic loss has been steadily increasing, peaking with the recent financial crisis. The impact of household wealth shocks on consumption, savings,...

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Venturing Beyond the IPO: Financing of Newly Public Firms by Pre-IPO Investors

A wide body of literature emphasizes that venture capitalists (VCs) focus on young private companies, generally in high-tech industries.  However, we find that these investors fund companies after the IPO as well.  In a sample of private firms going public for the first time, 15% of the firms...

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Should Mutual Funds Invest in Startups?

A Case Study of Fidelity Magellan Fund’s Investments in Unicorns (and other Startups) and the Regulatory Implications 

Contrary to longstanding practice and to their reputation for investing in public companies, mutual funds, including some of the most prominent, are allocating portions of their portfolios...

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The Persistent Effect of Early Success: Evidence from Venture Capital

Unlike other assets classes, private equity -- especially venture capital -- has been found to exhibit performance persistence. Money managers that perform well in one period have a higher likelihood of being above-average in their performance in the future. To understand better what might account for this persistence, we...

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The Life Cycle of Corporate Venture Capital

Recent decades have witnessed non-financial firms’ forays into venture capital by creating Corporate Venture Capital (CVC) divisions. That is, these firms create internal CVC divisions to make systematic minority equity investments in innovative startups. As an illustration, consider GM Ventures, the CVC unit initiated by General Motors in 2010....

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Center for Private Equity and Venture Capital
Tuck School of Business at Dartmouth
100 Tuck Hall
Hanover, NH 03755