Working Paper: CEPR ID: DP13932
Authors: Ufuk Akcigit; Emin Dinlersoz; Jeremy Greenwood; Veronika Penciakova
Abstract: Venture capital (VC) and growth are examined both empirically and theoretically. Empirically, VC-backed startups have higher early growth rates and initial patent quality than non-VC-backed ones. VC-backing increases a startup's likelihood of reaching the right tails of the firm size and innovation distributions. Furthermore, outcomes are better for startups matched with more experienced venture capitalists. An endogenous growth model, where venture capitalists provide both expertise and financing for business startups, is constructed to match these facts. The presence of venture capital, the degree of assortative matching between startups and financiers, and the taxation of VC-backed startups matter significantly for growth.
Keywords: venture capital; endogenous growth; mergers and acquisitions; R&D
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Venture Capital (G24) | Startup Growth (M13) |
| Venture Capital (G24) | Initial Patent Quality (L15) |
| Experience of Venture Capitalists (G24) | Startup Success (M13) |
| Venture Capital (G24) | Patenting Activity (O34) |
| Venture Capital (G24) | Patent Citations (O34) |
| Quality of Venture Capitalists (G24) | Employment Outcomes (J68) |
| Venture Capital (G24) | Aggregate Innovation (C43) |