Using novel data on U.S. households, we provide the first systematic study of private equity performance by individual investors. On average, individual investments in private equity perform similarly to institutions. However, the most affluent investors outperform the least affluent by 9 percentage points in public market equivalent. Advisor fixed effects explain two-thirds of the variation in private equity performance and 75% of the wealth performance gap, as wealthier investors have better advisors that deliver persistently higher returns. Intermediary fees impose a sizable drag on performance, especially for less affluent investors.

We assemble the first dataset of venture fraud cases involving 654 U.S. VC-backed startups. Venture fraud has increased over the past two decades. Among newly public firms, VC-backed companies are more likely to face fraud charges than comparable non-VC-backed firms. Governance characteristics, rather than founder traits, are the strongest predictors of fraud: fraud is more prevalent in startups with founder-friendly contracts, complex cap tables, and initial rounds raised in hot market conditions. Fraudulent entrepreneurs continue to found new VC-backed startups unharmed, suggesting weak market discipline. These findings highlight growing agency costs in private markets.

Many startups in the 2000s have remained private after achieving large valuations, a pattern that funding availability alone cannot explain. We propose that startups relying heavily on organization capital to achieve economies of scale and network effects through digital technologies are more likely to become large private firms than exit earlier via an IPO or acquisition. Using LinkedIn data, we construct a novel measure of organization capital intensity for startups. Exploiting a legal shock that strengthened organization capital protection, we provide causal evidence that organization-capital-intensive startups are more likely to remain private and grow large rather than exit early.