Mi Casa Es Tu Casa: Immigrant Entrepreneurs as Pathways to Foreign Venture Capital Investments

47 Pages Posted: 25 Feb 2019 Last revised: 18 Mar 2020

See all articles by Sarath Balachandran

Sarath Balachandran

Independent

Exequiel Hernandez

University of Pennsylvania - The Wharton School

Date Written: February 8, 2019

Abstract

Cross-border venture capital (VC) has reached record levels, but there is significant variance in the extent and location of VC firms’ foreign investments. We propose one mechanism to explain this heterogeneity: as VCs invest at home in immigrant entrepreneurs, they gain access to the knowledge and networks of those individuals, which facilitate subsequent investments in the entrepreneurs’ home countries. We find support for this mechanism in a study of U.S. VC firms’ investments in India (2005-2019). The effect is driven by first-generation immigrant entrepreneurs (possessing first-hand knowledge and connections) and is strongest for investments in the sub-regions of India where immigrants originate, for VCs located geographically near their U.S.-based startups, and for VCs with ethnic Indian partners.

Keywords: Immigration, Venture Capital, Foreign Investment, Entrepreneurship, Cross-Border Knowledge Transfer, Global Networks

JEL Classification: F21, F22, F23, M16

Suggested Citation

Balachandran, Sarath and Hernandez, Exequiel, Mi Casa Es Tu Casa: Immigrant Entrepreneurs as Pathways to Foreign Venture Capital Investments (February 8, 2019). Available at SSRN: https://ssrn.com/abstract=3331264 or http://dx.doi.org/10.2139/ssrn.3331264

Sarath Balachandran

Independent ( email )

No Address Available
United States

Exequiel Hernandez (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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