Underpricing of Venture Capital-Backed IPOs

This thesis researched the effect of Venture Capital ownership on underpricing in IPOs. We conducted OLS-regressions on two data samples consisting of IPOs in the Nordics between 2009 and 2019. Two samples were collected, consisting of 504 IPOs, of which 50 were Venture Capital-backed. The second sample consisted of 50 Venture Capital-backed IPOs, where 12 IPO was exited by Venture Capitalists. Through our regressions, we found that Venture Capital-backed IPOs where less underpriced than non-Venture Capital-backed IPOs due to the certification effect. Furthermore, Venture Capital-exited IPOs were more underpriced than Venture Capital-backed IPOs, suggesting that the exit's signaling effect increased ex-ante uncertainty surrounding the IPO.