Investor Exits, Innovation, and Entrepreneurial Firm Growth

The bursting of the dot-com bubble in 2001 coincided with an abrupt and lasting change in the development of entrepreneurial venture-backed firms in the United States. Previously, entrepreneurs and investors commonly took viable young firms public through initial public offerings. Since 2001, however, venture investors have more frequently exited by selling their companies to established corporations, usually for lower returns. There are concerns among some entrepreneurs, investors, and academics that this change has reduced the potential of young, entrepreneurial firms to contribute to innovation, job creation, international competitiveness, and economic growth. There are also claims that public policies, including securities regulation, have contributed to this result and should be modified or compensated for.


In 2007 investors, entrepreneurs, and academic experts in economics, corporate finance, and law came together to consider the merits and feasibility of additional research addressing the change in investor exit strategies, its causes and consequences. During the 2007 workshop, summarized in this volume, participants identified several factors complicating systematic inquiry and suggested a number of research avenues that could be productive.