How Well Do Venture Capital Databases Reflect Actual Investments?

30 Pages Posted: 22 Oct 2006

See all articles by Steven N. Kaplan

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); University of Chicago - Polsky Center for Entrepreneurship

Per Strömberg

Swedish House of Finance; ECGI; CEPR

Berk A. Sensoy

Vanderbilt University - Finance

Date Written: September 2002

Abstract

Researchers increasingly have used the two primary venture capital databases - VentureOne and Venture Economics - to study venture capital (VC) financings. These data are largely self-reported. In this paper, we compare the actual contracts in 143 VC financings to their characterizations in the databases. The databases exclude roughly 15% of the financing rounds. The Venture Economics database oversamples larger rounds and California companies while the financing rounds included in the VentureOne database exhibit no significant bias. The databases provide unbiased, but noisy measures of financing amounts and their valuations. The databases also are less successful in measuring milestone rounds. The VentureOne database oversamples valuations for highly valued firms even controlling for firm characteristics. We discuss the implications of these findings for researchers and practitioners.

Keywords: venture capital, databases, investments

JEL Classification: G24

Suggested Citation

Kaplan, Steven Neil and Stromberg, Per and Sensoy, Berk A., How Well Do Venture Capital Databases Reflect Actual Investments? (September 2002). Available at SSRN: https://ssrn.com/abstract=939073 or http://dx.doi.org/10.2139/ssrn.939073

Steven Neil Kaplan (Contact Author)

University of Chicago - Booth School of Business ( email )

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National Bureau of Economic Research (NBER)

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European Corporate Governance Institute (ECGI) ( email )

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University of Chicago - Polsky Center for Entrepreneurship

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Per Stromberg

Swedish House of Finance ( email )

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ECGI ( email )

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Berk A. Sensoy

Vanderbilt University - Finance ( email )

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United States

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