![]() ![]() ![]() We assume the impact is not uniform some investors and investments are affected more severely than others. Hence, we dissect the overall effect to gain more nuanced insights. However, little is known about the pandemic’s consequences for specific types of VC investments. Initial research shows VC investments declined as COVID-19 spread (e.g., Brown & Rocha, 2020 Brown et al., 2020 Howell et al., 2020). VC investments have declined during previous periods of increased economic uncertainty (Bartz & Winkler, 2016 Ramcharan et al., 2016), as it is more difficult for investors to assess a portfolio venture’s prospects and select high-quality ventures (e.g., Chemmanur et al., 2011 Rosenbusch et al., 2013). The COVID-19 pandemic increased economic uncertainty for VC investors (e.g., Baker et al., 2020 Kuckertz et al., 2020). Third, the pandemic spread rapidly worldwide, creating an almost instantaneous and global crisis (Baker et al., 2020). These responses affect how VC investors and entrepreneurs work, preventing in-person meetings, and making travel more difficult and costly, thus interfering with due diligence, monitoring, and other activities. Second, it has led to governmental responses of unprecedented scale, both economically (e.g., forced business closures, access to credit, subventions, investment programs) and socially (e.g., quarantines, curfews, social distancing, travel bans) (e.g., Fairlie & Fossen, 2021a Nicola et al., 2020 Pedauga et al., 2021 Sebhatu et al., 2020). First, it is a global health crisis with vast and potentially long-lasting economic, social, and political consequences that eclipse those of prior crises like the tech bubble or the global financial crisis (e.g., IMF, 2020). The pandemic is unique in several respects. We follow this line of inquiry and assess the impact of the COVID-19 pandemic on the VC landscape. Studies that assess the effects of crises like the tech bubble (1999–2001) (e.g., Aragon et al., 2019 Hochberg et al., 2018) and the global financial crisis (GFC) (2007–2009) (e.g., Block & Sandner, 2009 Conti et al., 2019 Cowling et al., 2012) on the VC financing of entrepreneurial ventures find the availability of VC reduces after a crisis, and that investors shift their attention from riskier new opportunities to investments already in their portfolios. They increase in periods of economic growth and decline in recessions (e.g., Bernstein et al., 2019 Gompers & Lerner, 2004 Gompers et al., 2008). They occur in boom and bust cycles and often follow the economy. Venture capital (VC) investments are volatile and cyclic. ![]()
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