We study how firm characteristics evolve from early business plan to initial public offering (IPO) to
public company for 50 venture capital (VC) financed companies. We describe the financial performance,
line of business, point(s) of differentiation, non-human capital assets, growth strategy, top management,
ownership structure, and the board of directors. The most striking finding is that firm business lines or
ideas remain remarkably stable from business plan through public company. Within those business lines,
non-human capital aspects of the businesses are more stable than human capital aspects. In the crosssection,
firms with more alienable assets experience more human capital turnover suggesting that specific
human capital becomes less critical as firms establish non-human assets. We obtain qualitatively similar
results to those in our primary sample for all non-financial start-up IPOs in 2004 – both VC- and non-VC
backed. This suggests that our main results are not specific to the presence of a VC or to the time period.
We discuss how our results relate to theories of the firm and to VC investment decisions.
* University of Chicago Graduate School of Business and NBER, ** University of Southern California, and ***
SIFR. This research has been supported by the Kauffman Foundation, by the Lynde and Harry Bradley Foundation
and the Olin Foundation through grants to the Center for the Study of the Economy and the State, and by the Center
for Research in Security Prices. We thank the venture capital partnerships for providing data. We thank Andres
Almazan, Ulf Axelson, George Baker, Ola Bengtsson, Effi Benmelech, Patrick Bolton, Bruno Cassiman, Zsuzsanna
Fluck, Oliver Hart, Thomas Hellman, Bengt Holmström, Josh Lerner, J ...