Leading Edge Archive > 2002 Human capital and the private equity premium 05/11/2002. What are the risks and returns of being an entrepreneur versus being a salaried employee who invests in the public market? Valery Polkovnichenko of the University of Minnesota attempts to find the answer. Such issues are important for the investor looking to understand why people start up businesses and what the perceived benefits are. Assessing the contribution of venture capital to innovation 08/10/2002. Venture capital has a positive and significant effect on innovation, according to Samuel Kortum of Boston University and NBER and Josh Lerner of Harvard University and NBER. This preliminary study aims to examine the influence of venture capital on patented inventions in the US. Minority private equity: a market in transition 01/10/2002. Demographic shifts in the US population have made a significant difference to the changes in the private equity market, argue Philip Alphonse, Thomas Hellmann and Jane Wei of Stanford Graduate Business School. As a percentage of the total US population, Asian, Black and Hispanic populations have been steadily increasing during the 90s, education levels are rising, and with them minority-owned businesses. These companies have evolved from small, locally focused start-ups to established players in expanding markets, ensuring that minority private equity is becoming more and more relevant to the market as a whole. The private equity discount: an empirical examination of the exit of venture backed companies 24/09/2002. One of the main problems for investors in private equity is the lack of transparency. How can private companies be valued? What are the risk and return characteristics of private equity investments? In a study of financing rounds spanning 20 years from 1980 to 2000, Sanjiv R Das, Murali Jagannathan and Atulya Sarin of Santa Clara University and SUNY shed some light on the matter. What do economists tell us about venture capital contracts? 26/08/2002. It is vital for venture capital market participants and policy makers alike to understand the problems inherent in the VC investment process and the mechanisms that have been developed to deal with these problems. Tereza Tykvová of the Centre for Economic Research (ZEW) explains. Law, innovation and finance: A review 15/07/2002. A number of recent national and EU initiatives have sought to encourage venture capital throughout the Continent. What role should lawyers play in facilitating new processes and to what extent can existing US practices offer any guidance, asks John Armour of the Centre for Business Research at Cambridge University. International venture capital: The role of start-up financing in the United States, Europe and Asia 09/07/2002. Governments are increasingly aware that venture capital is an important source of economic growth and a means of developing targeted sectors of their economies. Jeffrey Nuechterlein at the National Gypsum Company looks at the markets in the United States, Europe and Asia. Comparing catalysts of change: evolution and institutional differences in the venture capital industries in the US, Japan and Germany 02/07/2002. How have the venture capital industries evolved in the US, Germany and Japan? Walter Kuemmerle, a Harvard Business School professor, compares their development and explains how other countries can learn from the US model. The worst of times - for whom? 04/06/2002. Are we really experiencing the ‘worst of times', asks Dr Dirk Sohnholz of Feri Alternative Assets. It is essential that investors put the current downturn in its proper context to gain perspective and work out realistic predictions for future returns. Exploring the performance implications of different corporate venturing objectives 20/05/2002. Corporate venturing activity rose sharply during the second half of the nineties, with some programmes experiencing more success than others. But, to what extent do different corporate venturing objectives, such as financial versus strategic, affect corporate performance, asks Gary Dushnitsky at the Stern School of Business. Indexing private equity 23/04/2002. The 1990s saw indexing in public equity markets come of age. Private equity, on the other hand, offers very limited means by which investors can choose indexing over active management. John Barber and Laurence Zage of Helix Associates discuss indexing in the private equity market and suggest that investors would predominantly use it as a benchmarking tool. This would inspire greater confidence in the industry as a whole. Collateralised debt obligations in private equity 03/04/2002. Private equity collateralised debt obligations (CDOs) will allow portfolio investors a greater opportunity to participate in private equity markets and will bring additional liquidity, transparency and discipline to such markets. J Paul Forrester of Mayer, Brown, Rowe & Maw reviews the structures and features of a CDO, and why private equity is an attractive asset for a CDO. The impact of venture capital on firm growth: An empirical investigation 20/03/2002. Do venture capitalists add value? This study, which takes into account the fact that venture firms fund only high growth potential companies, suggests that they do. Dirk Engel of the Centre for European Economic Research, author of the study, found that surviving venture-backed companies had higher growth rates than non venture-backed companies. The risk and return of venture capital 25/02/2002. Venture capital investments carry more risk than most investments in the broad public market and their returns are much more modest than commonly thought, according to this paper by John Cochrane, of the University of Chicago. He concludes that VC investments are not dramatically different from publicly listed small growth stocks. Corporate venture capital and the value-added for technology-based companies 18/02/2002. What benefits, other than cash, can corporate venture capital investors offer their portfolio companies? This article, based on a dissertation by Dr Markku Maula at the University of Helsinki, provides some of the answers. It focuses on the mechanisms through which corporate venture capital investors add value to technology-based new firms and the factors influencing those value-adding mechanisms. Maula also explores the implications of these findings for corporate venture capital investors and entrepreneurs. Determinants of required return in venture capital investments: A five country study 05/02/2002. Using two complementary theoretical perspectives, this CMBOR Occasional Paper develops hypotheses regarding the determinants of the return required by venture capitalists and tests them on a sample of over 200 venture capital companies (VCCs) located in five countries. Corporate VCs and the creation of US public companies 14/01/2002. The role of large corporations as financiers of technology-based start-ups has increased dramatically during the last few years. Direct venture capital investments made by the subsidiaries and affiliates of industrial corporations have more than doubled during each of the last six consecutive years to a level of $18bn in the year 2000. In spite of this growth, and the many recent success stories on corporate venture capital appearing in the press, the true benefits and drawbacks for entrepreneurs in accepting strategic corporate investors as co-owners of their businesses are less clear. Dr Gordon Murray of London Business School and Markku Maula of the Helsinki University of Technology discuss.