Venturing beyond the IPO: Financing of Newly Public Firms by Venture Capitalists

Peter Iliev, Michelle Lowry

Research output: Contribution to journalArticlepeer-review

17 Scopus citations


Contrary to conventional wisdom, we document that approximately 15% of venture capitalist (VC)-backed firms raise additional capital from VCs in the five years after going public. We propose two explanations for why firms revert to VC financing post-IPO (initial public offering). First, we hypothesize that VC participation in post-IPO financing represents an efficient solution to informational problems that would otherwise constrain firms’ abilities to exploit value-increasing investments. Analyses of firm and VC characteristics, together with the finding that these investments are value-increasing for both VCs and the underlying companies, support this hypothesis. We find no support for the alternative that agency conflicts motivate these investments.

Original languageEnglish (US)
Pages (from-to)1527-1577
Number of pages51
JournalJournal of Finance
Issue number3
StatePublished - Jun 1 2020

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics


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