Sabrina Howell, Josh Lerner, Ramana Nanda, Richard Townsend, 14 May 2020

Governments worldwide have taken steps to bolster their venture capital sectors in response to the COVID-19 crisis. This column questions whether venture-backed innovation is particularly vulnerable to economic downturns, and finds that early-stage venture investment falls sharply during recessions. The quantity and quality of venture-backed innovation declines particularly for early-stage firms, underscoring the concerns that motivate such policy initiatives. Still, questions remain about the optimal design and public return of these expenditures.

Sabrina Howell, Ramana Nanda, 29 February 2020

Venture capital remains a critical source of financing for new ideas and technologies, but only 10-15% of venture capital-backed entrepreneurs are women. Using data from the Harvard Business School’s New Venture Competition, this column shows that networking frictions play a significant role in the gender gap, and that structural solutions focused only on providing women entrepreneurs with more exposure to VCs may not be enough to eliminate it. Instead, networking opportunities should be encouraged or even formalised, particularly in the realm of new venture competitions and accelerators.

Ufuk Akcigit, Emin Dinlersoz, Jeremy Greenwood, Veronika Penciakova, 24 September 2019

Differences between the majority of mediocre firms and the exceptional, innovative ones range from the founders’ backgrounds to their paths of innovation. This column assesses the impact of venture capital funding on the growth trajectories firms take. Employment and patenting data show venture capital-backed firms are likely to achieve greater success and contribute more significantly to the aggregate economy. The absence of venture capital funding would lower aggregate growth by 28%.

Bo Becker, Victoria Ivashina, 28 March 2019

In the past 30 years, defaults on corporate bonds in the US have been substantially above the historical average. Using firm-level data, this column shows that the increase in credit risk can be largely attributed to an increase in the rate at which new and fast-growing firms displace incumbents, a phenomenon defined as ‘disruption’. Incumbent revenue growth suffers when there are many IPOs in an industry, and newly issued bonds in high-disruption industries have higher yields.

Yujin Kim, Chirantan Chatterjee, Matthew J. Higgins, 15 December 2018

Investments in early-stage companies are declining, as venture capital firms find it hard to evaluate the risks and rewards from investing in the technologies. The column shows how the EU Orphan Drug Act caused a movement towards early-stage deals in affected sectors in both the EU and the US. Venture capital firms were more likely to invest at an early stage in sectors covered by the regulation and also made more early-stage investments.

Sadamori Koujaku, Daisuke Miyakawa, 16 November 2017

Venture capital firms use a variety of accumulated resources to inform their investment activities, but do the rely solely on their own resources or do they employ other firms’ resources to complement their own? This column examines the pattern of co-investments among venture capital firms and discusses the economic implications. Past experience of co-investments increases the likelihood of future co-investments among firms when the returns from these past co-investments were high, and also when the jointly invested venture business companies experienced greater growth after an IPO.

Monika Schnitzer, Martin Watzinger, 31 October 2017

Conventional wisdom holds that venture capital-financed start-up companies generate positive spillovers for other businesses, but these spillovers are hard to measure accurately. This column uses a broader analysis of patent spillovers than previous studies to argue that venture capital-financed start-up companies help established companies innovate, and play a significant role in the commercialisation of new technologies. This suggests that subsidies for venture capital investment should be at least as large as current R&D subsidies.

Daniel Cavagnaro, Berk Sensoy, Yingdi Wang, Michael Weisbach, 10 September 2016

Investment officers are often the highest-paid individuals in institutions such as pension funds and foundations, because of the size and importance of the decisions they make. This column argues that successful investment officers earn their pay, because they make returns that can't be explained by luck alone. Therefore, institutional investors might benefit from investing in high-quality investment officers.


The global financial crisis has had a profound impact on output and productivity in advanced and emerging economies. In response, policymakers around the world have acted boldly with monetary policy, macro-prudential policy and regulation.

Is productivity being held back by financial factors - such as the lack of long term finance for long term investment - or is productivity being held back by real economy factors, such as globalisation and demographics? The recent crisis has also spurred a reassessment of the relationship between the level (and type) of finance and growth. Could weak productivity growth owe in part to wasteful investment spending or an undersupply of financial services? How does the mix of early and late stage financing drive investment and productivity? This conference aims to bring together perspectives on these big questions, as they will provide important guidance for future policy actions.

Rick Watson, 02 November 2015

Small and medium-sized European businesses find it hard to raise capital, especially during their development phase. This column compares the situation in the US and Europe and suggests that many SMEs in Europe still face significant difficulties in identifying and accessing sources of funding. Promoting greater equity involvement and improving access to and information on all of the various funding options would do much to boost growth.

Kirill Shakhnov, 17 January 2015

The rapid growth of the US financial sector has driven policy debate on whether it is socially desirable. This column examines the trade-off between finance and entrepreneurship, and links the growth of finance to rising wealth inequality. Although financial intermediation helps allocate capital efficiently, people choosing a career in finance do not internalise the negative effect on the pool of talented entrepreneurs. This mechanism can explain the simultaneous growth of wealth inequality and finance in the US, and why more unequal countries have larger financial sectors.

William Kerr, 17 May 2013

Do economies’ social policies affect their innovative outcomes? This column uses the case of venture capital investors to argue that it may. Countries that protect workers rather than jobs – and thus avoid employment-protection laws – developed stronger venture-capital markets over 1999-2008, especially in highly volatile sectors like computers or energy.

Josh Lerner, 21 March 2013

Josh Lerner of Harvard Business School talks to Romesh Vaitilingam about his book "The Architecture of Innovation: The Economics of Creative Organizations". They discuss a variety of issues around the challenges of innovation, including corporate venturing, venture capital-based enterprises, patents and public investment in science. The interview was recorded in Washington, DC, at the annual meeting of the Toulouse Network on Information Technology in September 2012.

Josh Lerner, 12 March 2010

Josh Lerner of Harvard Business School talks to Vox about the policies that governments employ to encourage venture capital and entrepreneurial activity, drawing on the findings in his book, Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What to Do About It. The interview was recorded in London in January 2010.

Josh Lerner, 12 February 2010

Josh Lerner of Harvard Business School talks to Vox about sovereign wealth funds, which are the focus of a chapter in his new book, Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What to Do About It. The interview was recorded in London in January 2010.

Masako Ueda, Masayuki Hirukawa, 30 January 2009

Venture capitalists are casualties of the current crisis, as they have lost their ability to cash out their investments in the stock market. Should we worry that innovation and long-run growth are in trouble? This column summarises the evidence on venture capital and innovation, arguing that the current VC woes are unlikely to significantly dampen economic prospects.

Manju Puri, Rebecca Zarutskie, 19 September 2008

Venture capital has rapidly ascended as a major source of start-up financing in the last twenty years. This column summarises research that takes an in-depth look at firms financed by venture capital. Such financing significantly increases firms’ chances of survival in their early years and speeds their investment and growth.


CEPR Policy Research