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• Article | Journal of Financial Economics | July 2020

  The Persistent Effect of Initial Success: Evidence from Venture Capital

  Ramana Nanda, Sampsa Samila and Olav Sorenson

  We use investment-level data to study performance persistence in venture capital (VC). Consistent with prior studies, we find that each additional IPO among a VC firm's first ten investments predicts as much as an 8% higher IPO rate on its subsequent investments, though this effect erodes with time. In exploring its sources, we document several additional facts: successful outcomes stem in large part from investing in the right places at the right times; VC firms do not persist in their ability to choose the right places and times to invest; but early success does lead to investing in later rounds and in larger syndicates. This pattern of results seems most consistent with the idea that initial success improves access to deal flow and that preferential access raises the quality of subsequent investments, perpetuating performance differences in initial investments.

  Keywords: Performance; Monitoring; selection; Status; Venture Capital; Performance Consistency; Investment;

  Citation:

  Nanda, Ramana, Sampsa Samila, and Olav Sorenson. "The Persistent Effect of Initial Success: Evidence from Venture Capital." Journal of Financial Economics 137, no. 1 (July 2020): 231–248.  View Details

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• Working Paper | HBS Working Paper Series | 2020

  What Jobs Are Being Done at Home During the COVID-19 Crisis? Evidence from Firm-Level Surveys

  Alexander Bartik, Zoë Cullen, Edward L. Glaeser, Michael Luca and Christopher Stanton

  The threat of COVID-19 has increased the health risks of going to an office or factory, leading more workers to do their jobs remotely. In this paper, we provide results from firm surveys on both small and large businesses on the prevalence and productivity of remote work, and expectations about the persistence of remote work once the COVID-19 crisis ends. We present four main findings. First, while overall levels of remote work are high, there is considerable variation across industries. The Dingel and Neiman (2020) measure of suitability for remote work does a remarkably good job of predicting the industry level patterns of remote work—highlighting the challenge of moving many industries to remote work. Second, remote work is much more common in industries with better educated and better paid workers. Third, in our larger survey, employers think that there has been less productivity loss from remote working in better educated and higher paid industries. Fourth, more than one-third of firms that had employees switch to remote work believe that that remote work will remain more common at their company even after the COVID-19 crisis ends.

  Citation:

  Bartik, Alexander, Zoë Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. "What Jobs Are Being Done at Home During the COVID-19 Crisis? Evidence from Firm-Level Surveys." Harvard Business School Working Paper, No. 20-138, June 2020.  View Details

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• Working Paper | HBS Working Paper Series | 2020

  Venture Capital's Role in Financing Innovation: What We Know and How Much We Still Need to Learn

  Josh Lerner and Ramana Nanda

  Venture capital is associated with some of the most high-growth and influential firms in the world. Academics and practitioners have effectively articulated the strengths of the venture model. At the same time, venture capital financing also has real limitations in its ability to advance substantial technological change. Three issues are particularly concerning to us: 1) the very narrow band of technological innovations that fit the requirements of institutional venture capital investors; 2) the relatively small number of venture capital investors who hold, and shape the direction of, a substantial fraction of capital that is deployed into financing radical technological change; and 3) the relaxation in recent years of the intense emphasis on corporate governance by venture capital firms. While our ability to assess the social welfare impact of venture capital remains nascent, we hope that this article will stimulate discussion of and research into these questions.

  Keywords: financing; innovation; Venture Capital; Financing and Loans; Technological Innovation;

  Citation:

  Lerner, Josh, and Ramana Nanda. "Venture Capital's Role in Financing Innovation: What We Know and How Much We Still Need to Learn." Harvard Business School Working Paper, No. 20-031, June 2020.  View Details

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