Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • May 2021
  • Article
  • Review of Financial Studies

Mutual Funds as Venture Capitalists? Evidence from Unicorns

By: Josh Lerner, Sergey Chernenko and Yao Zeng
  • Format:Print
ShareBar

Abstract

The past decade saw the rise of both “founder-friendly” venture financings and non-traditional investors, frequently with liquidity constraints. Using detailed contract data, we study open-end mutual funds investing in private venture-backed firms. We posit an interaction between the classic agency problem between entrepreneurs and investors and the one between early-stage venture investors and liquidity-constrained later-stage ones. We find that mutual funds with more stable funding are more likely to invest in private firms, and that financing rounds with mutual fund participation have stronger redemption and IPO-related rights and less board representation, findings consistent with our conceptual framework.

Keywords

Investment Funds; Investment; Business Startups; Venture Capital; Private Equity; Governance

Citation

Lerner, Josh, Sergey Chernenko, and Yao Zeng. "Mutual Funds as Venture Capitalists? Evidence from Unicorns." Review of Financial Studies 34, no. 5 (May 2021): 2362–2410.
  • Find it at Harvard

About The Author

Josh Lerner

Entrepreneurial Management
→More Publications

More from the Authors

    • May 2025
    • Quarterly Journal of Economics

    The Diffusion of New Technologies

    By: Aakash Kalyani, Marcela Carvalho, Nicholas Bloom, Tarek Hassan, Josh Lerner and Ahmed Tahoun
    • 2025
    • Faculty Research

    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
    • 2025
    • Faculty Research

    Impact Investing and Worker Outcomes

    By: Josh Lerner, Markus Lithell and Gordon M. Phillips
More from the Authors
  • The Diffusion of New Technologies By: Aakash Kalyani, Marcela Carvalho, Nicholas Bloom, Tarek Hassan, Josh Lerner and Ahmed Tahoun
  • 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
  • Impact Investing and Worker Outcomes By: Josh Lerner, Markus Lithell and Gordon M. Phillips
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College.