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

Author

Listed:
  • Shai Bernstein
  • Kunal Mehta
  • Richard R. Townsend
  • Ting Xu

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.

Suggested Citation

  • Shai Bernstein & Kunal Mehta & Richard R. Townsend & Ting Xu, 2022. "Do Startups Benefit from Their Investors’ Reputation? Evidence from a Randomized Field Experiment," NBER Working Papers 29847, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29847
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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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