Research and teaching

Ramana Nanda, Sampsa Samila, and Olav Sorenson

We use investment-level data to study performance persistence in venture capital (VC). Consistent with prior studies, we find that each additional IPO among a VC firm’s first ten investments predicts as much as an 8.5% higher IPO rate on its subsequent investments, though this effect erodes with time. In exploring its sources, we document several additional facts: successful outcomes stem in large part from investing in the right places at the right times; VC firms do not persist in their ability to choose the right places and times; but early success does lead to investing more in later rounds and in larger syndicates. This pattern of results seems most consistent with the idea that initial success improves access to deal flow. That preferential access raises the quality of subsequent investments, perpetuating performance differences in initial investments.

Marc Lerchenmueller and Olav Sorenson

We examined the extent to which and why early career transitions have led to women being underrepresented among faculty in the life sciences. We followed the careers of 6,336 scientists from the post-doctoral fellowship stage to becoming a principal investigator (PI) – a critical transition in the academic life sciences. Using a unique dataset that connects individuals’ National Institutes of Health funding histories to their publication records, we found that a large portion of the overall gender gap in the life sciences emerges from this transition. Women transition to being a PI at a 20% lower rate than men. Differences in “productivity” (publication records) can explain about 60% of this lower rate. The remaining differential in the rates appears to stem from gender differences in the returns to similar publication records, with women systematically receiving less credit for highly-cited research.