Want your startup to have an IPO? Start spending more time with your VCs.
New research by Stanford Graduate School of Business professor Shai Bernstein shows that the more time venture capital investors spend with their portfolio companies, the more likely those startups are to produce innovation and have an exit, either an IPO or an acquisition. “This is compelling evidence that the active involvement of venture capitalists is very important for their portfolio companies,” says Bernstein.
The mystique surrounding venture capitalists, especially those at well-known firms like Kleiner Perkins or Andreessen Horowitz, is that their involvement with a startup is a golden ticket, making success much more likely. Yet even though about 40 percent of all companies that have an IPO in the United States are backed by venture capitalists, it has been almost impossible to know if that is the result of an investor’s involvement with a company or simply that VCs know how to pick winners.