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Social networks and start-up funding

Author

Listed:
  • Abakah, Alex Annan
  • Kim, Gunchang
  • Somé, Hyacinthe Yirlier

Abstract

This paper examines whether aggregate social networks influence start-up firms’ access to external funding. We find that start-ups in U.S. counties with higher social proximity to start-up funding (SPF) attract a larger investor base and secure more capital. The results are robust to several alternate specifications. We also show that start-ups in counties with higher SPF have high survival rates and successful exits. Our findings highlight the importance of aggregate social connections in facilitating access to early-stage funding.

Suggested Citation

  • Abakah, Alex Annan & Kim, Gunchang & Somé, Hyacinthe Yirlier, 2024. "Social networks and start-up funding," Finance Research Letters, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:finlet:v:64:y:2024:i:c:s1544612324005105
    DOI: 10.1016/j.frl.2024.105480
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    More about this item

    Keywords

    Start-up; Social connection; Start-up funding; Funding proximity;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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