Venture Capital Booms and Start-Up Financing

We review the growing literature on relationship between venture capital (VC) booms and start-up financing, focusing three broad areas. First, we discuss drivers of large inflows into VC asset class, particularly in recent years, which are related to but also distinct from macroeconomic business cycles stock market fluctuations. Second, emerging real effects financing booms. A particular focus this work is highlight potential impact that (and busts) can have types firms investors choose fund terms at they funded, independent investment opportunities—thereby shaping trajectory innovation being conducted by start-ups. Third, an important insight research not just a temporal phenomenon be seen concentration certain industries geographies. role government policy, exploring degree it explain funding United States over past 40 years two areas—information communication technologies biotechnology. conclude highlighting promising areas further research.