Do Startups Benefit from Their Investors' Reputation? Evidence from a Randomized Field Experiment

58 Pages Posted: 16 Feb 2022 Last revised: 30 Sep 2022

See all articles by Shai Bernstein

Shai Bernstein

Harvard University - Business School (HBS)

Kunal Mehta

AngelList LLC

Richard Townsend

University of California, San Diego (UCSD) - Rady School of Management

Ting Xu

University of Toronto, Rotman School of Management

Date Written: September 29, 2022

Abstract

We analyze a field experiment conducted on AngelList Talent, a large online search platform for startup jobs. In the experiment, AngelList randomly informed job seekers of whether a startup was funded by a top-tier investor and/or was funded recently. We find that the same startup receives significantly more interest when information about top-tier investors is provided. Information about recent funding has no effect. The effect of top-tier investors is not driven by low-quality candidates and is stronger for earlier-stage startups. The results show that venture capitalists can add value passively, simply by attaching their names to startups.

Keywords: Venture Capital, Startup Labor Market, Human Capital, Job Search, Randomized Field Experiment, Certification Effect

JEL Classification: G24, L26, J22, J24, C93

Suggested Citation

Bernstein, Shai and Mehta, Kunal and Townsend, Richard and Xu, Ting, Do Startups Benefit from Their Investors' Reputation? Evidence from a Randomized Field Experiment (September 29, 2022). Darden Business School Working Paper No. 4036022, Available at SSRN: https://ssrn.com/abstract=4036022 or http://dx.doi.org/10.2139/ssrn.4036022

Shai Bernstein

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

Kunal Mehta

AngelList LLC

United States

Richard Townsend

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Ting Xu (Contact Author)

University of Toronto, Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://https://sites.google.com/site/tingxu4

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