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Publications
Publications
  • 2003
  • Chapter
  • Innovation Policy and the Economy, Volume 3

Short-Term America Revisited? Boom and Bust in the Venture Capital Industry and the Impact on Innovation

By: Josh Lerner and Paul A. Gompers
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Abstract

This chapter seeks to understand the implications of the recent decline in venture activity for innovation. It argues that the situation may not be as grim as it initially appears. While there are many reasons for believing that on average venture capital has a powerful effect on innovation, the effect is far from uniform. During boom periods, the prevalence of over funding of particular sectors can lead to a sharp decline in the effectiveness of venture funds. While prolonged downturns may eventually lead to good companies going unfounded, many of the dire predictions today seem overstated.

Keywords

Venture Capital; Innovation and Invention; Business Cycles; Financial Services Industry; United States

Citation

Lerner, Josh, and Paul A. Gompers. "Short-Term America Revisited? Boom and Bust in the Venture Capital Industry and the Impact on Innovation." In Innovation Policy and the Economy, Volume 3, edited by Adam B. Jaffe, Josh Lerner, and Scott Stern, 1–28. MIT Press, 2003.
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About The Authors

Josh Lerner

Entrepreneurial Management
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Paul A. Gompers

Entrepreneurial Management
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    By: Kyle Herkenhoff, Josh Lerner, Gordon M. Phillips, Francisca Rebelo and Benjamin Sampson
More from the Authors
  • The Diffusion of New Technologies By: Aakash Kalyani, Marcela Carvalho, Nicholas Bloom, Tarek Hassan, Josh Lerner and Ahmed Tahoun
  • Mobvoi's Path Through Market Challenges and Business Reinvention By: Paul A. Gompers and Shu Lin
  • Private Equity and Workers: Modeling and Measuring Monopsony, Implicit Contracts, and Efficient Reallocation By: Kyle Herkenhoff, Josh Lerner, Gordon M. Phillips, Francisca Rebelo and Benjamin Sampson
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