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

56 Pages Posted: 21 Mar 2022 Last revised: 20 Jan 2023

See all articles by Shai Bernstein

Shai Bernstein

Harvard University - Business School (HBS)

Kunal Mehta

Independent Researcher

Richard Townsend

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

Ting Xu

University of Toronto, Rotman School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: March 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.

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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 (March 2022). NBER Working Paper No. w29847, Available at SSRN: https://ssrn.com/abstract=4062399

Shai Bernstein (Contact Author)

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

Kunal Mehta

Independent Researcher ( email )

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 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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