Was there too little entry during the Dot Com Era?

We present four stylized facts about the Dot Corn Era: (1) there was a widespread belief in a Get Big Fast business strategy, (2) the increase and decrease in public and private equity investment was most prominent in the Internet and information technology sectors, (3) the survival rate of dot com firms is on par with or higher than other emerging industries, and (4) firm survival is independent of private equity funding. To connect these findings we offer a herding model that accommodates a diveraence between the information and incentives of venture capitalists and their investors. A Get Bia Fast belief cascade could have led to overly focused investment in too few Internet startups and, as a result, too little entry. (C) 2007 Elsevier B.V. All rights reserved.