Title: Performance effects of luring top investors for early-stage financing

Authors: Timo B. Johnson; Carolin Bock; Christian Fisch; Dirk Schiereck

Addresses: Department of Law and Economics, Technical University of Darmstadt, 64289 Darmstadt, Germany ' Department of Law and Economics, Institute of Entrepreneurship, Technical University of Darmstadt, 64289 Darmstadt, Germany ' Interdisciplinary Centre for Security, Reliability, and Trust, University of Luxembourg, 2 Av. de l'Universite, 4365 Esch-Belval Esch-sur-Alzette, Luxemburg ' Department of Law and Economics, Technical University of Darmstadt, 64289 Darmstadt, Germany

Abstract: We assess how early-stage financing affects the overall performance of start-ups. Specifically, we compare the impact of accelerator programs, business angels, venture capitalists, and non-refundable capital on the acquisition of follow-on financing and exit success. We also assess differences between top investors and other investors in the respective financing form. Based on a dataset of 81,883 start-ups, we show that both the financing form and the individual investors have significant long-term effects on performance. More specifically, the relative contribution of the financing form is strongly outweighed by the experience effects of top investors. Utilising various fixed effects and probit regression models, we demonstrate that these results are valid across financing forms and apply to both interim performance and exit success.

Keywords: accelerator; acquisition; angel; entrepreneurial finance; exit; investor; IPO; performance; start-up; venture capital.

DOI: 10.1504/IJEV.2023.133456

International Journal of Entrepreneurial Venturing, 2023 Vol.15 No.4, pp.317 - 345

Received: 16 May 2022
Accepted: 17 Apr 2023
Published online: 15 Sep 2023 *

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