Social Networks, Funding, and Regional Advantages in Technology Entrepreneurship

Abstract

Economic factors, funding opportunities and social networks have influenced entrepreneurs’ choice of their startup location. With increased penetration of digital technologies in startups, the traditional need for proximity to specific locations or large funding for infrastructure development have diminished. Digital entrepreneurs now pursue locations that provide more opportunities for funding and greater social support, and enable lower startup costs. In this paper, we use economic indicators made publicly available by the U.S. government, investment information from CrunchBase, and professional histories and network data from LinkedIn, to study regional and personal factors that influence digital entrepreneurs’ location choice. These digital entrepreneurs have a choice to establish a startup in their current location or move to a different location. When relocating, entrepreneurs decide to create a startup immediately or delay it by a short duration (possibly to be more embedded in the local environment). Analysis of 1,424 entrepreneurs, suggests that funding rounds per year play a significant and positive role in influencing startup creation and local social network density and tenure in location provide a stickiness to decision making and negatively influence entrepreneurs' decisions to relocate.

Keywords: Social Networks, Entrepreneurship, Regional Advantage, Startups, Innovation, technology entrepreneur

JEL Classification: M13, D71, D80, O15, O30, O51, R23