Tax Incentives and Venture Capital Risk-Taking - Murillo Campello скачать в хорошем качестве

Tax Incentives and Venture Capital Risk-Taking - Murillo Campello

This online public lecture in this series was given by Murillo Campello of Warrington College of Business, University of Florida on the topic, “Tax Incentives and Venture Capital Risk-Taking" Can tax subsidies prompt investors to take on more risk? We address this question within a framework in which venture capitalists (VCs) combine outside funding with incentive-based compensation and examine a policy that eliminated capital gains taxes on startup investments. Our study analyzes data from 158 thousand investor–firm pairings over two decades. We find that when and where tax subsidies apply, VCs shift their project selection toward riskier ventures: they become more likely to provide tax-eligible businesses with their initial capital, venture more into pre-commercial stage startups, invest in industries in which they have no prior experience, and more in firms with pre-existing debt, while becoming less likely to co-syndicate their investments. These portfolio firms eventually show higher failure rates. On the flip side, the increased risk-taking yields salient return outcomes: tax-subsidized VC-backed ventures attain higher valuations at exit and are more likely to reach “unicorn status.” None of these patterns are observed for comparable non-VC investors eligible for the same tax subsidies. Our study is the first to show that tax policy can shift entrepreneurial financing toward riskier, more experimental, valuable ventures, with outcomes shaped by investor organizational structure and incentives. This lecture was moderated by Luiz Ricardo Kabbach, ICGE Research Director, Kelley School of Business, Indiana University. Lecture date and time: Wednesday, 5 November 2025 | 12:00 – 13:00 EDT (18:00 – 19:00 CET)