Micro VC

38 Pages Posted: 27 May 2022

See all articles by Mario Daniele Amore

Mario Daniele Amore

Bocconi University - Department of Management and Technology

Annamaria Conti

University of Lausanne - Faculty of Business and Economics (HEC); University of Lausanne

Valerio Pelucco

Bocconi University

Multiple version iconThere are 2 versions of this paper

Date Written: April 2022

Abstract

Using a large dataset of US investors and their portfolio startups, we analyze the phenomenon of micro VC investors, that is, VC firms managing funds smaller than $50 million. We show that investments by micro VCs have increased at a much steeper rate than those by traditional VCs during 2010-2020. We find significant differences between micro and traditional VCs beyond fund size. Micro VCs invest in early-stage startups more than traditional VCs do. Despite the greater risk of such investments, micro VCs use staged financing less frequently than traditional VCs. Additionally, micro VCs invest in geographically closer startups but their investments span a larger set of industries than traditional VCs. Examining the implications for portfolio startups, we find that startups financed by micro VCs raise less capital than those funded by traditional VCs and are less likely to exit via IPO or acquisition. These results are more pronounced when micro VCs are led by former entrepreneurs and are, at least in part, ascribed to the more founder-friendly management style of micro VCs.

Keywords: early-stage investment, fund size, Performance, venture capital

JEL Classification: G24, L26

Suggested Citation

Amore, Mario Daniele and Conti, Annamaria and Conti, Annamaria and Pelucco, Valerio, Micro VC (April 2022). CEPR Discussion Paper No. DP17258, Available at SSRN: https://ssrn.com/abstract=4121441

Mario Daniele Amore (Contact Author)

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Annamaria Conti

University of Lausanne - Faculty of Business and Economics (HEC) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

University of Lausanne ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

Valerio Pelucco

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

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