Venture capital returns in Australia

This paper examines the returns to venture capital in Australia. It is hypothesized that returns to venture capital will be associated with the type of venture capital firm (captive or non-captive; specialist or non-specialist), venture capital experience, syndication, duration and exit strategy. Using a sample of 129 venture capital exits between 1992 and 2002, it was found that Australian venture capitalists take only the best firms public, generating higher returns than from other exit strategies. Syndicated investments generate lower returns (after controlling for firm-specific risks), while no difference was found in return profiles on the basis of firm type (captive, specialist or experience) or duration of investment. The results are robust to model specifications that control for stage of investment, industry and year of exit.