1. Publications
  2. Review of Financial Studies, 2/2023
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Common Venture Capital Investors and Startup Growth

We exploit the staggered introduction of liability waivers when investors hold stakes in conflicting business opportunities as a shock to venture capital (VC) investment and director networks. After the law changes, we find increases in within-industry VC investment and common directors serving on startup boards. Despite the potential for rent extraction, same-industry startups inside VC portfolios benefit by raising more capital, failing less, and exiting more successfully. VC directors serving on other startup boards are the primary mechanism associated with positive outcomes, consistent with common VC investment facilitating informational exchanges in VC portfolios.

09. September 2023

Authors Ofer Eldar Jillian Grennan

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Keywords

investors start-ups venture capital

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Professor Ofer Eldar, PhD
Professor Ofer Eldar, PhD
Economist

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Dr Wolfgang Sender
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