--- title: "Hidden in Plain Sight: Venture Growth With or Without Venture Capital" authors: ["Christian Catalini", "Jorge Guzman", "Scott Stern"] venue: "MIT Working Paper" year: 2017 area: entrepreneurship featured: false abstract: "Most IPOs and acquisitions happen without venture capital. Using population-level registration data and predictive analytics, the paper shows that firms with growth potential look alike at founding whether or not they raise VC — surfacing the 'missing' growth firms outside the venture pipeline and new facts about how VCs select." --- While the study of high-growth firms has focused predominantly on VC-backed startups, the majority of IPOs and acquisitions are achieved without venture capital. This motivated us to use population-level data, combined with a predictive analytics approach, to shed light on these `missing' growth firms and on the process of venture capital selection. We find that the observables that are associated at birth with selection into VC are also predictive of growth within the non-VC sample, suggesting that firms with growth potential - irrespective of funding path - are similar to each other. The approach also allows us to estimate an upper bound on the returns to VC: While a naive comparison would lead to a drastic over-estimate, our results show that VC-funded firms are 2.4 to 6 times more likely to achieve an exit. Overall, our findings suggest the presence of alternative paths to growth (with or without venture capital), but a single profile for high potential firms.