Data sources

Variable definitions

Several terms are used throughout the paper and in Table 1, which we define here.

Venture capital fund (firm): The passage of the Dodd-Frank Act introduced a formal definition of a VC fund (rule 203(l)-1). From the SEC:

the rule defines a venture capital fund as a private fund that: (i) holds no more than 20 percent of the fund‘s capital commitments in non-qualifying investments (other than short-term holdings) (“qualifying investments” generally consist of equity securities of “qualifying portfolio companies” that are directly acquired by the fund, which we discuss below); (ii) does not borrow or otherwise incur leverage, other than limited short-term borrowing (excluding certain guarantees of qualifying portfolio company obligations by the fund); (iii) does not offer its investors redemption or other similar liquidity rights except in extraordinary circumstances; (iv) represents itself as pursuing a venture capital strategy to its investors and prospective investors; and (v) is not registered under the Investment Company Act and has not elected to be treated as a business development company (“BDC”).

SEC rule

This definition is close to the spirit of the VC fund definitions used by data providers prior to Dodd-Frank. Most VC funds file a Form D when they raise capital (e.g. Sequoia and Benchmark). Venture capital firms manage venture capital funds – typically filing Form ADVs – as exempt reporting advisors (e.g., Bessemer).

Venture capital-backed startups: Any private firm that has raised some form of capital from a venture capital investor as defined above. Startups can transition from bootstrapped, to angel investor-backed to VC-backed, etc. Most samples in Ewens and Farre-Mensa (2021) consider startups on or after their first VC financing as “VC-backed” and treat them as such until a liquidation event (e.g. IPO or acquisition).

Private equity fund (firm): A private equity fund is a pooled investment vehicle managed by a private equity firm. These funds are unique as they are exempt from the usual investment company registration rules (i.e., Section 3(c)(1) or 3(c)(7) of the Investment Company Act) and are thus often call ed 3(c)(1) Fund or a 3(c)(7) Fund (SEC).

Non-traditional investor: An investor in a VC-backed startup that is not a venture capital firm (defined above), angel investor or individual.

Early-stage financing: For the statistics provided in Ewens and Farre-Mensa (2021), financings of VC-backed startups that are the first or second round of equity financing (i.e., Series A, seed or Series B).

Late-stage financing: Financings for VC-backed startups that are not early-stage financings (see above). This typically translates to Series C (i.e., 3rd round financing) or later.

Growth equity financing: We follow the definition used in Pitchbook. A growth equity financing has at least on investor that is a private equity firm labeled “growth” or “expansion”, the round size exceeds $15m and it does not follow an exit event. VentureSource defined growth financings as investments in profitable startups that were at least 4 years old and had a lead investors that was a private equity investor.

Details on the rows of Table 1

This is a recreation of the Appendix for Table 1 in the Ewens and Farre-Mensa (2021). We deflate all dollar figures to dollars of 2012 purchasing power using the GDP deflator (i.e., the deflator the U.S. Bureau of Economic Analysis uses to construct real GDP from nominal GDP.

Rows 1-2: Using VentureSource, count of unique startups backed by VC raising a round of financing in that year or the first round ever raised.
Row 3: For IPO and SEO volume, see Federal Reserve data on U.S., non-financial capital raising by publicly-traded firms.
Row 4: Here we report the sum of all capital raised by VC-backed startups (non-IPOs) by year (source: VentureSource).
Row 5: Capital committed to venture capital funds based in the U.S. For 2002, source is VentureSource, U.S.-based VC funds. For 2008 and on, source is Pitchbook (search of U.S.-based VC funds).
Row 6: The total capital raised by private equity (non-VC) funds by year. Source: Pitchbook search.
Row 7. The median size of VC funds raised in each year. Source: Pitchbook.
Row 8. The allocation to private equity and venture capital by public pension plans. Source: Public Plans data.
Row 9: For all years, we collected the asset allocation statistics from the public data tables at the NACUBO. For each year, we calculate the sum of PE and VC allocation percentages, where PE excludes real estate. Percentages are dollar-weighted.
Row 10: Preqin market reports from Gredil et al. (2021) on VC dry powder. Dry powder is defined as capital committed up to the current year net of investments from previous funds raised.
Row 11: The value $99m is the 90th percentile of VC-backed IPO offering sizes from 1990–2000. The reported number is the count of VC financings that exceed this amount in each year. All data from VentureSource.
Row 12: The percentage of dollars invested in Series C or later financing events in VC-backed startups. The denominator is the total amount of (real) dollars invested in all VC equity financings in that year. Source: VentureSource.
Row 13: The total dollars invested in growth equity rounds in Pitchbook (Pitchbook NVCA report 2016 definition using Pitchbook search).
Row 14: SEC Form C data, count of unique platforms facilitating equity crowdfunding issues. Raw data is available from the SEC website.
Row 15: Count of venture capital investors (as defined by VentureSource) with at least one investment in a year. An investor shows up in any year where it makes at least one investment.
Row 16: Unique number of investors of any type in first or second round financings of VC-backed startups by year. An investor shows up in any year where it makes at least one investment. Source: VentureSource.
Row 17: Pitchbook search for “angel” or “angel group” investors and all associated deals for VC-backed startups over the relevant years.
Row 18: Using a search of founding dates on Pitchbook for investors in the US that have the primary designation as “Accelerator/Incubator.”
Row 19: SEC Form C data, count of unique platforms facilitating equity crowdfunding issues. Raw data is available from the SEC website.
Row 20: Unique number of investors of any type in third round (i.e., Series C) or later financings of VC-backed startups by year. Source: VentureSource.
Row 21: The count of number of VC-backed startup financings that have at least one mutual fund or hedge fund investor in the financing syndicate. Source: Pitchbook search.
Row 22: The fraction of late-stage (Series C or later) financing dollars that had at least one non-traditional investor in the syndicate (e.g., PE, mutual, or hedge fund). Source: VentureSource.
Rows 23-27: These rows report various valuation statistics. Average Series A(C) pre-\$ are the average reported pre-money valuations for Series A(C) financing rounds. The average equity sold is the as-if-common equity stake sold to the VC investor (i.e., capital invested divided by the post-money valuations). The count of unicorns by year using the nominal post-money valuations. All data sourced from VentureSource.
Row 28: Count of secondary financing events for U.S.-based VC-backed startups. Source: Pitchbook search.
Rows 29-31: Contract terms for VC financings with preferred stock. Sourced from VCExperts and Pitchbook for 2002 and 2008, Pitchbook for the remaining years. Statistics are available for the subset of startups that have contracts data. Each row represents the percentage of known contracts with the contract term.
Row 32: For all Series a financings with at least one board member, the percentage of boards where the VC directors have greater than 50\% of the seats. Source: Ewens and Malenko (2020).
Row 33: The median age in years at IPO of VC-backed firms in VentureSource. Age is defined from first VC financing to IPO date.
Row 34: The median amount of capital raised in IPOs (primary shares) for VC-backed IPOs reported in VentureSource.