The Rise of Early-Stage Financing in the US and Startup Performance

57 Pages Posted: 16 Apr 2024

See all articles by David Heller

David Heller

Max Planck Institute for Innovation and Competition

Maria Veihl

Analysis Group, Inc.

Date Written: April 13, 2024


This paper examines startup performance in the context of the Seed Boom, a previously unexplored but significant transformation in the US entrepreneurial financing landscape. Unparalleled by other developments, the frequency of first-round VC investments towards particularly young startups quadrupled within three years during the early 2010s, facilitating the survival of promising but high-risk startups. This shift has received little attention in the academic literature, while its potential (negative) implications in terms of a potential crunch in follow-on investments and startup performance were extensively debated by practitioners at the time. Consistent with the resource-based view but contrary to practitioners' concerns, we find that many Seed-backed startups were able to secure follow-on investments. Similarly, we provide robust evidence that the Seed Boom was not accompanied by a decline in startup performance. As potential mechanisms, we show that Seed-backed startups provide unique business opportunities serving as critical resources, which, however, need the complementary resources provided by VCs to unfold their potential.

Keywords: Entrepreneurial Finance, Startup Performance, Resource-Based View, Venture Capital, Seed Financing

JEL Classification: G24, M13, L26, L10

Suggested Citation

Heller, David and Veihl, Maria, The Rise of Early-Stage Financing in the US and Startup Performance (April 13, 2024). Available at SSRN: or

David Heller (Contact Author)

Max Planck Institute for Innovation and Competition

Marstallplatz 1
Munich, Bayern 80539


Maria Veihl

Analysis Group, Inc. ( email )

1900 16th Street
Suite 1100
Denver, CO 80202
United States

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