The Impact of Founder Gender and Gender Anonymity on Online Fundraising: Evidence from a Field Experiment

We study how crowdfunding, as a source of public information, affects competing venture capital (VC) firms' investment decisions in terms of the timing, likelihood, and expected amount of VC investment in a startup. Our economy consists of one startup, one crowdfunding platform, and two VC firms with differing prior beliefs about the startup's probability of success. The startup first approaches both VC firms for funding, which is modeled as a second-price auction between the two firms, and then turns to the crowdfunding platform if rejected by both. After the crowdfunding, the VC firms update their assessments of the startup's success based on the information collected from the crowdfunding platform, and the startup seeks funding from them again. We find that crowdfunding and the competition between the VC firms raise the expected amount of VC investment. Moreover, crowdfunding increases the chance of a startup receiving VC funding only for those startups deemed unfavorable by both VC firms; for debatable startups about which VC firms' views diverge, crowdfunding may reduce their chance of receiving VC investment. We then examine how the relationship between crowdfunding and VC investment is shaped by the characteristics of the startup and the crowdfunding platform. For instance, when the more optimistic VC firm has a moderate expectation for the startup and the investment risk is high (resp., low), that VC firm tends to invest before the startup seeks crowdfunding if the crowdfunding information is sufficiently accurate (resp., noisy). Finally, we observe more nuanced crowdfunding effects in several model extensions, for example, if the startup is allowed to strategically decide on the timing to receive a VC investment, and if VC firms can observe private signals on the startup.

The condensed research article presents some innovative research results on the venture capital optimal investment portfolio strategies selection in the diffusion-type financial systems in the imperfect highly volatile global capital markets with the incomplete information, which are characterized by the asymmetric information flows and impacted by the various types of the nonlinearities. We discuss the venture capital firms with the different organizational structures: the corporation funded venture capital firm, investment bank funded venture capital firm, private equity funded venture capital firm, state funded venture capital firm. We consider the complicated issues on the venture capital optimal investment portfolio strategies selection, evaluation of the possible returns on the investments, and implementation of exit strategies for the venture capital investment schemes. We propose that the information signals can be mixed and self-modulated during the asymmetric information flows in the information transmission channels between the market agents, resulting in the origination of the various types of the nonlinearities such as the high order harmonics, which may have a considerable impact on the venture capital investments in the diffusion-type financial system. These nonlinearities have to be taken to an account during the venture capital optimal investment portfolio strategies selection process, which is all about making the right investment choices with the application of the inductive, deductive and abductive logics. In our opinion, the State of Queensland in Australia is a very attractive place to make the venture capital investments in the hi-tech startups, comparing to other regions in the World. We conclude with the notion that the venture capital can greatly improve the macroeconomic indicators of national economies, creating the new hi-tech industries, generating the abundant wealth, and increasing the Gross Domestic Product.

This paper examines the long-run relationship between venture capital investment and per capita economic growth in the 19 European Economic Area (EEA) countries for the period 1989-2014. We use three different indicators of venture capital (VC) investment, namely VC at early stage investment, VC at later stage investment, and VC total investment. Using cointegration technique, the study warrants the support of long-run relationship between VC investment and per capita economic growth in a few cases, typically with reference to a particular VC indicator and per capita economic growth we use. Using vector auto-regressive (VAR) model for testing the Granger causalities, the study acknowledges mixed evidence of the relationship between the venture capital investment and per capita economic growth in the selected EEA countries, both by individual country and at the panel setting. In some instances, venture capital investment leads to per capita economic growth, lending support to supply-leading hypothesis (SLH) of VC investment-growth nexus. In other instances, it is the per capita economic growth that regulates the level of venture capital investment, lending support to demand-following hypothesis (DFH) of VC investment-growth nexus. There are also circumstances, where venture capital investment and per capita economic growth are mutually interdependent. That is the situation where both are self-reinforcing and offer support to feedback hypothesis (FBH) of VC investment-growth nexus. In addition, there are also instances, where the venture capital investment and per capita economic growth are independent of each other. This is the situation where both are neutral and offer support to neutrality hypothesis (NLH) of VC investment-growth nexus. To summarize, Granger causality results vary from country to country within the EEA countries, depending upon the type of venture capital investment and per capita economic growth that we use in a particular empirical exploration process. The policy implication of this study is that the economic policies should recognize the differences in the venture capital investment and per capita economic growth in order to maintain sustainable development in these EEA countries.

The article examines the impact of information and communication technologies (ICT), innovation, and formal and informal institutions on venture capital (VC) investment. The analysis is based on 28-year data spanning 1990-2017 from 19 European and 13 Asia-Pacific countries using generalized two-stage least square instrumental variable technique. After controlling for endogeneity, the results show that ICT, innovation, and informal institutions hold a strong impact on VC investment. ICT and innovation exert a positive and significant influence on VC investment whereas formal institutions exert a positive yet insignificant effect on VC investment. Among the informal institutions, power distance and individualism exert significant and positive influence whereas uncertainty avoidance has significant and negative influence on VC investment. The interaction analysis demonstrates that the association between ICT and VC is strong when institutional quality is high. Moreover, the impact of innovation on VC is pronounced in highly digitized and highly uncertainty-tolerant environments. Explanation of VC capital investment also vary with geography as the effects of trend, ICT and uncertainty avoidance on VC investment are noticeable in the Asia-Pacific region whereas power distance is prominent in the European region. The article makes important contributions to the literature of VC by revealing novel interactions between formal and informal institutions, ICT and innovation depicted in a conceptual model. The study also brings in important highlights to the policy debate on VC development by showing how exactly VC investments are tangled with the different dimensions of institutional and technological environment.

We examine the impact of crowdfunding on venture capital (VC) investments in the presence of competition among VC firms. Our economic model comprises a startup, a crowdfunding platform, and two VC firms, each with its own perception of the startup’s potential. The startup seeks equity funding from the VC firms and decides on the size of its equity offer. If the VC firms decline to invest, the startup pivots to crowdfunding. Following the crowdfunding campaign, all firms update their beliefs about the startup’s likelihood of success based on the crowdfunding outcome, prompting the VC firms to revisit their investment decisions, now with a reduced equity offer if the crowdfunding outcome was positive. This study provides theoretical underpinnings at the firm level for the observed aggregate-level empirical relationships, both positive and negative, between crowdfunding and VC investments. Specifically, based on our model, the positive relationship, where increased crowdfunding activity leads to a rise in subsequent VC investments, is attributed to startups that fail to secure VC funding in the absence of a crowdfunding platform but succeed in attracting VC attention after a successful crowdfunding campaign. In contrast, the negative relationship is attributed to highly valued startups that could have secured VC funding without crowdfunding, but with crowdfunding, VC firms choose to defer their investment decision until after the crowdfunding campaign’s result is known; on the one hand, a successful crowdfunding outcome lowers their post-crowdfunding VC investment demand, and on the other hand, an unsuccessful outcome deters potential VC investors. Besides these relationships, we also identify another dynamic, where the option of accessing crowdfunding raises VC investment, even if the startup does not actually launch a crowdfunding campaign. This paper was accepted by Sridhar Tayur, entrepreneurship and innovation. Funding: This work was supported by the Natural Sciences and Engineering Research Council of Canada [Grants RGPIN-2015-06757 and RGPIN-2021-04295] and the National Natural Science Foundation of China [Grant 71901135]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.00994 .

This paper examines venture capital investment into clean technologies. The determinants examined are government policies, venture capital trends, energy prices, and other macroeconomic variables. The history of cleantech investment is examined, and econometric methods are used to examine cleantech venture capital’s relationships with energy prices, aggregate venture capital investment, and macroeconomic variables. This paper finds that government policy, oil prices, the economic outlook, and trends in venture capital investment are very important determinants of venture capital investment into cleantech. The findings suggest direct relationships between government support of cleantech, higher oil prices, and positive economic outlooks with investment into cleantech. Also, this paper finds growing trends in venture capital investment and that capital inflows into the venture capital industry has a large effect in boosting venture capital investment into cleantech.

Four pairs of selection lines of Merino sheep consisting of 100 ewes and 5 rams were established at the Trangie Agricultural Research centre in 1951. Each line was selected (mass selection) for the appropriate character and direction (Plus or Minus) for a period of 18 years (5 generations). Pedigree analysis of these selected lines in terms of gene contributions revealed different patterns in means and standard deviations of gene contributions of male and female founders. Female founders showed a consistent pattern in all of the selected lines, with an increasing trend for the first 5-6 years in both parameters, and then stabilised. Fleece Plus showed the smallest variation, with an average coefficient of variation of 163%, whereas Folds Plus showed the highest variation with 213%. In the mean contributions, male founders showed a declining pattern for the first 5-6 years and finally stabilised. In the standard deviations, Weight and Folds flocks showed an increasing pattern in the first 1-2 years, whereas Fleece and Crimp flocks showed a declining pattern for the first 3-6 years before stabilising. Male founders showed smaller variation in mean contribution than female founders. In the Weight and Folds flocks, coefficients of variation were in the range of 55-88%, whereas in the Fleece and Crimp flocks they ranged from 98% to 156%. On average, 71% of genes were contributed by female founders and 29% by male founders. A good agreement (>90%) was found between observed and estimated inbreeding from Wray and Thompson (1990) expression in all flocks except Weight Plus and Fleece Minus lines. Effective numbers of male, female, and both male and female founders showed a consistent pattern of early fluctuation, with a trend towards increasing, and eventually stabilised in all the lines. Fleece Plus and Folds Plus lines showed the smallest and highest effective numbers for male, female, and both male and female founders, respectively, which is consistent with the pattern of observed inbreeding. During the first and second year there was a major reduction in the effective number of female founders, which is an indication of marked decrease in the genetic variability at the beginning.

Research Summary Government involvement plays a significant role in fostering entrepreneurship. We examine how government involvement in venture capital (VC) investments shapes the decoupling between risk‐taking and investment returns. We distinguish government involvement through state ownership (GVC) and personal political connections (connected VC). We theorize that government involvement through GVC is associated with the downside risk–return paradox, that is, concurrent higher risk‐taking and lower‐than‐expected returns. In contrast, government involvement through connected VCs is linked to the upside risk–return paradox, that is, concurrent lower risk‐taking and higher‐than‐expected returns. Our theoretical predictions receive general support from analyses using longitudinal data from VC firms in China. Our study sheds light on the heterogeneity in the decoupling between risk and return and the underlying mechanisms through which governments influence entrepreneurship. Managerial Summary Governments often seek to promote entrepreneurship; yet, their involvement in start‐ups tends to deviate from the conventional wisdom of a positive risk–return association. Government‐owned venture capital (VC) firms tend to take greater risks and invest in earlier‐stage start‐ups, but yield lower returns from their investments. Conversely, VC firms that have personal ties to government officials tend to take lower risks and prefer later‐stage start‐ups, yet achieve higher returns. These intriguing findings reveal the complexities of government participation in entrepreneurial activities and offer valuable insights for policy formulation. In addition, our findings highlight the importance for entrepreneurs to recognize diverse goals and resources in government involvement. Considering this when seeking external financing is helpful in positioning start‐ups for growth and success.

Skin in the Game: An Analysis of Venture Capital Investment in Dermatology from 2002 to 2021

We study the investment patterns of different types of venture capital (VC) investors in Europe: independent VC, corporate VC, bank-affiliated VC and governmental VC. We rely on a unique dataset that covers 1663 first VC investments made by 846 investors in 737 young high-tech entrepreneurial ventures in seven European countries. We compare the relative specialization indices of the different VC investor types across several dimensions that characterize investee companies: industry, age, size, stage of development, distance from the investor and country. Our findings indicate that VC investor types in Europe differ substantially in their investment patterns when compared to one another and that, in terms of investment patterns, governmental VC investors appear to be the most distinct type of VC investor. The investment patterns of different VC investors are stable over time and similar across different European countries. Finally, the investment patterns of the different VC investor types in Europe are significantly different from those observed in the USA.

Venture capital investment in university spin-offs: Evidence from an emerging economy

Purpose – The purpose of this paper is to empirically demonstrate that drivers of venture capital (VC) investments are different across three broadly defined sectors: high-technology manufacturing, medium-technology manufacturing and services, and low-technology services. Moreover, such differences also exist across industries within each of these sectors. Design/methodology/approach – The basic hypothesis is that “not only different stages of VC investments have different drivers, but VC investments in different sectors of the economy are also driven by different drivers.” The paper tests this hypothesis using a Poterba (1989) type supply and demand framework in the multivariate time-series regression analysis. Findings – This paper empirically demonstrates that drivers of VC investments are different across three broadly defined sectors: high-technology manufacturing, medium-technology manufacturing and services, and low-technology services. Moreover, such differences also exist by stages of investment and across industries within each of these sectors. In particular, the paper finds that the importance of the number of VC-led initial public offering (IPO) transactions as the main driver of VC investment decreases with the level of technology involved in the sector. IPO transactions are particularly important in software, networking and equipment, and business products and services industries. In contrast to earlier literature, however, the paper do not find a more pronounced effect of IPOs for seed and late stages of VC investments. Similarly, the positive impact Sarbanes-Oxley Act of 2002 – which mainly impacts public companies – also intensifies with a decrease in the level of technology involved in the sector, and the paper do not find a negative impact. The Act is important particularly for VC investments in medium- and low-tech sectors and in early or expansion stages. Originality/value – In analyzing the determinants of VC in a supply and demand framework as in Poterba (1989), the paper differentiates between different sectors (17 industries) and stages of VC (four stages: seed, early, expansion, late). Such level of differentiation is novel and allows more refined and better targeted public policy measures.

The objective of this paper is to survey and determine the macroeconomic factors affecting the level of venture capital (VC) investments in a country. The literary depends on venture capitalists’ quality and countries’ venture capital investments. The aim of this paper is to give relationship between venture capital investment and macro economic variables via statistical computation method. We investigate the countries and macro economic variables. By using statistical computation method, we derive correlation between venture capital investments and macro economic variables. According to method of logistic regression model (logit regression or logit model), macro economic variables are correlated with each other in three group. Venture capitalists regard correlations as a indicator. Finally, we give correlation matrix of our results.

While India’s nascent startup industry has emerged to be amongst the top three startup industries globally, the grave challenge of lack of finance is thwarting the industry from reaching its potential. Insufficient funding is a major deterrent to startups’ growth which leads to death of startups at initial stages. Venture capital (VC) investments solve this problem of financial crunch and enable these startups to attain growth and scalability. Consequently, it becomes imperative to analyse and study factors that attract VC investments in a particular country. At present, there is limited literature on VC investments and their determinants pertaining to Asian countries. Specifically, no study has analysed the factors that impact VC investments in context of the Indian states. Building on the scanty literature, the present study has attempted to empirically determine the state level determinants that impact VC investments in startups in India. Using two-step System Generalised Method of Moments (GMM) on panel data for 15 states from 2008-2016, the study has analysed the impact of selected state-specific economic, infrastructural and institutional variables on VC investments. The results highlight that employment, teledensity, credit deposit ratio and state GDP positively affect the venture capital activity in a state. On the contrary, past venture capital investments and electricity available per capita negatively affect the venture capital activity in a state. The paper concludes with broad policy implications that will help policymakers create a conducive environment for fostering VC activity.

It is known that venture capital (VC) investments are highly correlated with the development of technology-based industries. We use a set of technology-based firms between 1996 and 2001 in Taiwan to examine the relation between VC investments and market valuation and track the performance outcome of this sample until the end of 2007. We first find that firms invested by VC funds are related with less possibility of financial crises than those without invested by VC funds, especially in firms with high ratio of intangible assets. Second, the VC investment is value relevant to investors in firms with higher uncertainty. These findings support the certification function of venture capitalists and the importance of specific nonfinancial information on market valuation for investors.