Venture Capital Funding in the Middle of the Year 2011: Are We Back to Pre-Crisis Boom Levels?

Strategic Change: Briefings in Entrepreneurial Finance, Vol. 20, Issues 5-6, pp. 161-169, 2011

17 Pages Posted: 25 Aug 2011

See all articles by Jorn H. Block

Jorn H. Block

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Institute of Management (ERIM)

Philipp G. Sandner

Frankfurt School of Finance & Management

Date Written: August 23, 2011

Abstract

The 2009 financial crisis had a severe impact on the venture capital market. This brief article summarizes the empirical evidence as regards the effect of the financial crisis on venture capital financing. Further, the article analyzes, whether now, in the middle of 2011, the venture capital market is back to its pre-crisis boom levels. Using large-scale data from the US Internet industry, we find that the number of funding rounds and the average amount of funds raised are back to pre-crisis boom levels and the next phase of investor irrational exuberance may have already started. Another finding concerns the variation in the funds raised per funding round. It seems that the financial crisis has favored the development of “winner-take-all” markets in the US Internet industry. Those ventures that have survived the financial crisis such as Twitter or Facebook are now collecting even larger sums of money than they probably would have collected if the financial crisis would not have occurred.

Keywords: financial crisis, venture capital, after-crisis, irrational exuberance, CrunchBase

JEL Classification: E32, G01, G24

Suggested Citation

Block, Jorn Hendrich and Sandner, Philipp, Venture Capital Funding in the Middle of the Year 2011: Are We Back to Pre-Crisis Boom Levels? (August 23, 2011). Strategic Change: Briefings in Entrepreneurial Finance, Vol. 20, Issues 5-6, pp. 161-169, 2011, Available at SSRN: https://ssrn.com/abstract=1915584

Jorn Hendrich Block (Contact Author)

University of Trier - Faculty of Management ( email )

D-54296
Germany

Erasmus University Rotterdam (EUR) - Institute of Management (ERIM) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Philipp Sandner

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

HOME PAGE: http://www.philipp-sandner.de

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