Abstract
New ventures feed into ecosystems of investors, human capital, and other businesses. This paper considers the impact of a having a diverse mix of early stage funding options on the subsequent milestones and growth potential of startups in terms of follow-on investment and employment growth through new hires. We leverage differences in geographic reach of different funding sources using novel microdata on a matched sample of startups. We find that having a diverse mixture of startups and funding sources impacts subsequent VC investment and hiring outcomes. Whether a startup hails from the same or distant region as the funder plays a large role in the early development of startups. This effect is amplified for startups in accelerators relative to those with angel group funding.
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