Learning to Launch

55 Pages Posted: 5 Dec 2024

See all articles by Shenje Hshieh

Shenje Hshieh

City University of Hong Kong

Geoffery Zheng

New York University (NYU) - New York University (NYU), Shanghai

Date Written: October 1, 2024

Abstract

We document that "pedigreed" entrepreneurs, those with prior work experience at large, public firms, create startups that outperform. We employ a novel instrument based on M&As to instrument for founder pedigree and estimate the causal impact of pedigree on startup performance. We estimate that having a pedigreed founding team leads to a 3.5 percent higher likelihood of raising financing, 22.4 percent more funds raised, and a 7.8 percent higher likelihood of filing a new patent within 3 years of founding. These startups are also 6 percent more likely to be acquired within 5 years of founding. This is consistent with investors viewing the founding team’s pedigree as a signal of domain knowledge, rather than general quality.

Suggested Citation

Hshieh, Shenje and Zheng, Geoffery, Learning to Launch (October 1, 2024). Proceedings of the EUROFIDAI-ESSEC Paris December Finance Meeting 2024, Available at SSRN: https://ssrn.com/abstract=5037473 or http://dx.doi.org/10.2139/ssrn.5037473

Shenje Hshieh (Contact Author)

City University of Hong Kong ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Geoffery Zheng

New York University (NYU) - New York University (NYU), Shanghai ( email )

1555 Century Ave
Shanghai, Shanghai 200122
China

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