1. Lerner (1994): Venture Capitalists n Ritter (1984, 1991): More IPOs when the stock market is “high.” n Greater financing activity when real investment activities are good. n Substitution of public equity for private equity when the stock market is high.

2. Lerner (1994): Venture Capitalists n Biotechnology Industry n Products take long (> 10 years) to bring to market. n Do not include large up-front costs in building manufacturing facilities. n Remain in R&D phase until well after going public. n Venture capitalists provide funds in stages. n Each financing round is accompanied by a formal review of the firm’s status. n Each round involves an explicit decision to go public or remain private. n Hence, venture investors in the biotechnology industry have the opportunity to time their IPO according to market conditions.

3. Lerner (1994): Venture Capitalists n Table 2 n Venture-backed IPOs in the biotech industry are made when n Biotech stock index is higher. n The biotech stock index has risen about 9.9% in the previous quarter. n Subsequently, the biotech index falls by 4.6% (in the next quarter). n Venture capitalists in the biotech industry seek private equity when n Biotech stock index is lower. n the biotech stock index has risen about 4.6% in the previous quarter. n Subsequently, the biotech index rises by another 6.1% (in the next quarter).

4. Lerner (1994): Venture Capitalists n Table 2: Venture-capitalists in the biotech industry appear to have the ability to time the (biotech) stock market. n A picture is worth a thousand words. n Figures 1 and 2. n Table 3: Evidence that results noted in Table 2 are statistically significant.

5. Lerner (1994): Venture Capitalists n Venture Capitalist Experience n VCs syndicate investments to their peers or less experienced counterparts. n Lead VC is usually the most experienced. n VCs not likely to invest in deals initiated by their less experienced counterparts.

6. Lerner (1994): Venture Capitalists n Table 5 n IPOs backed by more experienced venture capitalists further emphasizes the results in Table 2. n Biotech stock index is higher (for more experienced VCs). n The biotech stock index has risen by more in the previous quarter. n Subsequently, the biotech index falls by more (in the next quarter).