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Timing is key: Navigating venture capital funding for science-based startups

Author

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  • Fosfuri, Andrea
  • Nagar, Jay Prakash

Abstract

Science-based startups, which develop technologies at the frontier of scientific knowledge, play a crucial role in innovation ecosystems. However, despite their potential for groundbreaking innovation, these startups may face frictions in securing venture capital (VC) funding. This paper investigates whether science-based startups systematically take longer to secure VC funding compared to startups that are less rooted in science. We develop a formal model that highlights a misalignment between scientists, who often prioritize technological advancement, and VCs, who seek market validation. This misalignment is particularly relevant in early funding rounds, where startups have stronger outside options. Drawing on PitchBook data for startups founded between 1990 and 2015, we find that science-based startups often struggle to attract timely investment, which may limit their ability to scale and commercialize new technologies. This is reflected in a negative correlation between longer times to VC funding and subsequent startup performance.

Suggested Citation

  • Fosfuri, Andrea & Nagar, Jay Prakash, 2026. "Timing is key: Navigating venture capital funding for science-based startups," Research Policy, Elsevier, vol. 55(3).
    • Handle: RePEc:eee:respol:v:55:y:2026:i:3:s0048733325002318
    DOI: 10.1016/j.respol.2025.105402
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    Keywords

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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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