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Paul Gompers and Josh Lerner's Venture Capital Cycle is an illuminating academic examination of the form and function of venture-capital funds. Gompers and Lerner are Harvard Business School professors who have researched extensive original data to analyze venture-capital fundraising, investing, and exiting methods. Beginning with a historical overview of entrepreneurial finance, the book examines how venture partnerships are structured, how venture capitalists are compensated, the staging of investments in operating companies, and the relative performance of venture-capital-backed offerings. There's also an interesting comparison of corporate venture organizations, such as Xerox PARC, with those of independent and other venture groups. Venture capitalists use industry knowledge and monitoring skills to finance projects with significant uncertainty, typically concentrating investments in early-stage companies and high-tech industries. Large information gaps between entrepreneurs and investors create conflicted interests, and the book looks at some of the novel checks and balances most often employed.
One of the book's themes is that the whole venture-capital process is best understood as a cycle: from the raising of a fund; to investing in, monitoring, and adding value to firms; then exiting deals; returning capital to investors; and finally renewing itself by raising additional funds. The need to exit an investment successfully shapes all aspects of the venture-capital cycle, from the ability to raise capital to the types of investments made. Another theme is that because venture funds must make long-term illiquid investments, they need to secure funds from their investors for periods of 10 years or more. The supply of venture capital consequently cannot adjust quickly to changes in the investment environment.
The authors conclude that increasing familiarity with the venture-capital process has made the long-term prospects for venture investment more attractive than ever. Entrepreneurs, venture capitalists, and investors will find this book a scholarly, well-documented examination of the industry. --Scott Harrison
Reviews note the book is "academic" but don't always capture how tedious this is or what it feels like. Read morePublished on December 13, 2007 by Bruce_in_LA
I agree with Michael that this book is probably more suitable for the academic than the practitioner. Read morePublished on March 11, 2007 by Edwin Lee Tsze Yuen
I am forced to use this book for level 2 CAIA certification. Unfortunately, unlike the other titles in the curriculum, this title has little or no practical application for... Read morePublished on March 10, 2007 by Richard J. Meyer
This was one of the better books I've read on VC. Extremely well researched, very informative, though it took awhile to read. Recommended.Published on January 14, 2006 by M. Moradi
Very important content, but of limited use for actual VC investors or entrepreneur. It is very good with its findings, but they are all known to investors, and are of less interest... Read morePublished on February 12, 2003 by entrepreneneur century
This bokk is...ok! I mean it is good but a little bit boring. It presents a lot of studies made obviously by these two authors. However, that sounds really too much sometimes. Read morePublished on May 16, 2002 by A RAVEL GAUBEY
This book is an awesome read for those who want to enter the world of Venture Capital. It explains more than what VC's do, it elaborates on the "how,when,why" of the... Read morePublished on March 28, 2002
Considering the fact that this book was written by 2 professors at the Harvard Business School and was published by a prestigious academic press (the MIT Press), it should seem... Read morePublished on December 6, 2001
Loved the book. It won't appeal to someone not accustomed to reading academic work, but is thoroughly informative. Read morePublished on July 30, 2001 by CLARK