Rivalry and the dynamic instability of venture capital investment shares

Abstract

This article examines the time-series properties of the US venture capital investments (VCI) to determine whether or not various sectors compete in the same market for venture capital funds. Using a battery of unit root tests, we find substantial evidence that VCI shares are nonstationary. Our findings are consistent with a high degree of rivalry for VCI among the different sectors.

Keywords:

• venture capital investments
• industry analysis
• shares
• unit root tests

JEL Classification:

• C22
• O32

Notes

¹ See Elliot et al. (1996) for further discussion of the de-trending procedure.