Abstract:
The venture capital (VC) industry is a game of"home runs," with a few
lucrative exits compensating investors for the many ~'strike outs" along the way
(Gompers and Lerner 2001). Consistent with this view, finance scholars report that
VCs aggressively prune weaker startups in their investment portfolios to re-allocate
resources to their more likely winners (Puri and Zarutski 2012). Using data on VC-backed
software startups, I nonetheless find many numerous instances where distressed
startups "restart" rather than cease operations. I investigate broader trends affecting the
financing opportunities of software startups and compare characteristics of restart and
non-restart firms within the sector. To complement this quantitative analysis, I conduct
three case studies that illuminate the factors that could lead firms to be in a "restart
situation" and the actions taken to tum around these fledgling companies.
Description:
46 pages. A thesis presented to the Department of Business and the Clark Honors College of the University of Oregon in partial fulfillment of the requirements for degree of Bachelor of Arts, Spring 2014.