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

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