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

57 Pages Posted: 25 Feb 2019 Last revised: 28 Apr 2021

See all articles by Sarath Balachandran

Sarath Balachandran

Independent

Exequiel Hernandez

University of Pennsylvania - The Wharton School

Date Written: October 20, 2020

Abstract

Venture capital firms predominantly source investments from local networks within tight geographic bounds. Against that pattern, VCs are increasingly investing internationally—but with substantial heterogeneity across firms in extent, location, and success. We propose a mechanism to explain this: ties to immigrant entrepreneurs. VCs form such ties differentially by investing in domestic startups led by immigrants, whose knowledge and connections facilitate investments in their homelands. We validate this idea through a study of U.S. VC in India. Firms invest in more Indian startups as their ties to Indian immigrants in the U.S. increase, particularly in the Indian region where immigrants originate and when the VC faces greater domestic competition. Those ties also enhance the odds of successful exit for the VCs Indian investments.

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 (October 20, 2020). Available at SSRN: https://ssrn.com/abstract=3331264 or http://dx.doi.org/10.2139/ssrn.3331264

Sarath Balachandran

Independent ( email )

Exequiel Hernandez (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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