000			01594nam a22001937a 4500
008			190312b xxu||||| |||| 00| 0 eng d
022			_a0304-405X
245			_aCost of experimentation and the evolution of venture capital / by Michael Ewens, Ramana Nanda, Matthew Rhodes-Kropf _cMichael Ewens, Ramana Nanda, Matthew Rhodes-Kropf
260			_aAmsterdam _bElsevier _c June 2018
300			_aPages 422-442
440			_aJournal of Financial Economics _v128 (3) _x0304-405X
520			_aAbstract We study how technological shocks to the cost of starting new businesses have led the venture capital model to adapt in fundamental ways over the prior decade. We both document and provide a framework to understand the changes in the investment strategy of venture capitalists (VCs) in recent years – an increased prevalence of a “spray and pray” investment approach – where investors provide a little funding and limited governance to an increased number of startups that they are more likely to abandon, but where initial experiments significantly inform beliefs about the future potential of the venture. This adaptation and related entry by new financial intermediaries has led to a disproportionate rise in innovations where information on future prospects is revealed quickly and cheaply, and reduced the relative share of innovation in complex technologies where initial experiments cost more and reveal less.
690			_aInnovation
690			_aVenture capital
690			_aEntrepreneurship
690			_aInvesting
690			_aAbandonment options
942			_2lcc _cSE
999			_c361342 _d361342