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
Date Written: February 8, 2019
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: Suggested Citation