How macroeconomic conditions shape venture capital preferences

Abstract

This thesis examines how U.S. monetary‐policy surprises influence venture‐capital activity from January 2000 to December 2024. The 30-day Fed‐funds futures shocks are orthogonalized against lagged industrial production and CPI, then decomposed into policy and information shocks via equity-based sign restrictions. Aggregated monthly, these innovations are matched to deal sizes, deal counts, funding stages, and sector allocations for ten VC firms. Static OLS regressions understate the effects, while a VAR(4) reveals front-loaded liquidity responses to rate shocks and “pause-then-play” dynamics following communication shocks. Sector and stage specific response patterns indicate that investment timing reflects both liquidity availability and uncertainty resolution.