Abstract

http://ssrn.com/abstract=1570269
 
 

Citations (12)



 


 



The Consequences of Entrepreneurial Finance: A Regression Discontinuity Analysis


William R. Kerr


Harvard University - Entrepreneurial Management Unit

Josh Lerner


Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER)

Antoinette Schoar


Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

March, 13 2010

AFA 2011 Denver Meetings Paper

Abstract:     
This paper documents the role of angel funding for the growth, survival, and access to follow-on funding of high-growth start-up firms. We use a regression discontinuity approach to control for unobserved heterogeneity between firms that obtain funding and those that do not. This technique exploits that a small change in the collective interest levels of the angels can lead to a discrete change in the probability of funding for otherwise comparable ventures. We first show that angel funding is positively correlated with higher survival, additional fundraising outside the angel group, and faster growth measured through growth in web site traffic. The improvements typically range between 30% and 50%. When using the regression discontinuity approach, we still find a strong, positive effect of angel funding on the survival and growth of ventures, but not on access to additional financing. Overall, the results suggest that the bundle of inputs that angel investors provide have a large and significant impact on the success and survival of start-up ventures.

Number of Pages in PDF File: 35

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Date posted: March 14, 2010  

Suggested Citation

Kerr, William R. and Lerner, Josh and Schoar, Antoinette, The Consequences of Entrepreneurial Finance: A Regression Discontinuity Analysis (March, 13 2010). AFA 2011 Denver Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1570269 or http://dx.doi.org/10.2139/ssrn.1570269

Contact Information

William R. Kerr
Harvard University - Entrepreneurial Management Unit ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
Josh Lerner (Contact Author)
Harvard Business School - Finance Unit ( email )
Boston, MA 02163
United States
617-495-6065 (Phone)
617-496-7357 (Fax)
HOME PAGE: http://www.people.hbs.edu/jlerner/
Harvard University - Entrepreneurial Management Unit
Cambridge, MA 02163
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Antoinette Schoar
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
50 Memorial Drive, E52-447
Cambridge, MA 02142
United States
617-253-3763 (Phone)
617-258-6855 (Fax)
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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