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

57 Pages Posted: 21 Mar 2022

See all articles by Shai Bernstein

Shai Bernstein

Harvard Business School

Kunal Mehta

AngelList LLC

Richard Townsend

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

Ting Xu

University of Virginia - Darden School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: February 15, 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 (February 15, 2022). Harvard Business School Entrepreneurial Management Working Paper No. 22-060, Harvard Business School Finance Working Paper No. 22-060, Darden Business School Working Paper No. 4060288, Available at SSRN: https://ssrn.com/abstract=4060288 or http://dx.doi.org/10.2139/ssrn.4060288

Shai Bernstein (Contact Author)

Harvard Business School ( 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

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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