Abstract
This study of the relationship between internationalization and IPO performance examines 184 privately held venture capital-backed U.S. technology-based new ventures. Internationalization subjects new ventures to high agency risks, as communication and monitoring of activities become more difficult. Yet, foreign activities can enhance resource stocks of new ventures via market knowledge and coordination capabilities. The study finds that solely domestic new ventures receive higher valuations at initial public offerings (IPOs) than do new ventures with a high proportion of foreign sales. This conclusion informs that investors perceive that agency risks outweigh the possible benefits of enhanced resource endowments from foreign activities. In addition, high international intensity new ventures execute IPOs later than solely domestic ventures. As IPOs are the primary means by which investors receive a return on their investments, this finding has significant implications for entrepreneurs seeking capital and for their investors.