Experienced Entrepreneurial Founders and Venture Capital Funding

Abstract

Using a novel dataset of 149 early stage start-up firms, I empirically examine how prior entrepreneurial founding experience affects the timing and valuation of venture capital (VC) funding. Such founding experience results in both enhanced skill in building current start-ups and in improved social capital that can be used to, for example, recruit executive officers. The results suggest that entrepreneurs differ in accumulated human and social resources, which in turn have measurable effects on VC timing and valuation. The results are accentuated for entrepreneurs with financially successful prior founding experience. The study concludes with implications for academics and managers.