round financing amounts than the general population,
and appear to have been systematically valued
at amounts less than the mean firm in the population.
Moreover, the VCs that funded sample
firms appear, in general, to be lower quality. This
suggests that we undersample high-quality firms.
This sample characteristic may lead to a general
paucity of VC funding events. A lack of representation
of high-quality VCs in our sample implies
that our results may not generalize to that class of
investors.
Many of the requests for funding were received
in the dot-com bubble and its immediate aftermath.
This poses two important problems. First,
we are studying an era of early industry emergence.
There was no tried-and-true way to do
business on the Internet during this period (see
Goldfarb, Kirsch, and Miller, 2007). Second, our
sample is Internet specific. It is unknown to what
extent our results generalize to business planning
documents for mature industries or to other emerging
industries such as, say, biotechnology. This
problem is mitigated somewhat as our sample
also includes requests received during the postbust
era when the industry was (slightly) more
mature.
Finally, as the FVC did not invest in any of the
companies that we observe, the analysis implicitly
assumes that the cues identified in the business
planning documents submitted to the FVC were
the same or substantially similar to those submitted
to the eventual funders. While this assumption
may be strong for testing hypotheses relating to
the form of the request (i.e., Hypothesis 1), the
strategic decision to disclose information and the
information content disclosed are likely to remain
constant
round financing amounts than the general population,
and appear to have been systematically valued
at amounts less than the mean firm in the population.
Moreover, the VCs that funded sample
firms appear, in general, to be lower quality. This
suggests that we undersample high-quality firms.
This sample characteristic may lead to a general
paucity of VC funding events. A lack of representation
of high-quality VCs in our sample implies
that our results may not generalize to that class of
investors.
Many of the requests for funding were received
in the dot-com bubble and its immediate aftermath.
This poses two important problems. First,
we are studying an era of early industry emergence.
There was no tried-and-true way to do
business on the Internet during this period (see
Goldfarb, Kirsch, and Miller, 2007). Second, our
sample is Internet specific. It is unknown to what
extent our results generalize to business planning
documents for mature industries or to other emerging
industries such as, say, biotechnology. This
problem is mitigated somewhat as our sample
also includes requests received during the postbust
era when the industry was (slightly) more
mature.
Finally, as the FVC did not invest in any of the
companies that we observe, the analysis implicitly
assumes that the cues identified in the business
planning documents submitted to the FVC were
the same or substantially similar to those submitted
to the eventual funders. While this assumption
may be strong for testing hypotheses relating to
the form of the request (i.e., Hypothesis 1), the
strategic decision to disclose information and the
information content disclosed are likely to remain
constant
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