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The advantage of experienced start-up founders in venture capital acquisition: evidence from serial entrepreneurs

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  • Junfu Zhang

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Abstract

Existing literature suggests that entrepreneurs with prior firm-founding experience have more skills and social connections than novice entrepreneurs. Such skills and social connections could give experienced founders some advantage in the process of raising venture capital. This paper uses a large database of venture-backed companies and their founders to examine experienced founders' access to venture capital. Compared to novice entrepreneurs, entrepreneurs with venture-backed founding experience tend to raise more venture capital at an early round of financing and tend to complete the early round much more quickly. In contrast, experienced founders whose earlier firms were not venture-backed do not show a similar advantage over novice entrepreneurs, suggesting the importance of connections with venture capitalists in the early stage of venture capital financing. However, when the analysis also takes into account later rounds of financing, all entrepreneurs with prior founding experience appear to raise more venture capital. This implies that skills acquired from any previous founding experience can make an entrepreneur perform better and in turn attract more venture capital.
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Suggested Citation

  • Junfu Zhang, 2011. "The advantage of experienced start-up founders in venture capital acquisition: evidence from serial entrepreneurs," Small Business Economics, Springer, vol. 36(2), pages 187-208, February.
  • Handle: RePEc:kap:sbusec:v:36:y:2011:i:2:p:187-208 DOI: 10.1007/s11187-009-9216-4
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    Cited by:

    1. Francine Lafontaine & Kathryn Shaw, 2016. "Serial Entrepreneurship: Learning by Doing?," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 217-254.
    2. Rocha, Vera & Carneiro, Anabela & Amorim Varum, Celeste, 2015. "Serial entrepreneurship, learning by doing and self-selection," International Journal of Industrial Organization, Elsevier, vol. 40(C), pages 91-106.
    3. repec:kap:sbusec:v:49:y:2017:i:1:d:10.1007_s11187-017-9865-7 is not listed on IDEAS
    4. Carpentier, Cécile & Suret, Jean-Marc, 2015. "Angel group members' decision process and rejection criteria: A longitudinal analysis," Journal of Business Venturing, Elsevier, vol. 30(6), pages 808-821.
    5. Colin Mason & Ross Brown, 2013. "Creating good public policy to support high-growth firms," Small Business Economics, Springer, vol. 40(2), pages 211-225, February.
    6. Jean Rédis & Jean-Michel Sahut, 2014. "Entrepreneuriat répété, capital organisationnel et accès au financement par capital-risque," Working Papers 2014-260, Department of Research, Ipag Business School.
    7. Oliver Alexy & Joern Block & Philipp Sandner & Anne Ter Wal, 2012. "Social capital of venture capitalists and start-up funding," Small Business Economics, Springer, vol. 39(4), pages 835-851, November.
    8. Junfu Zhang, 2011. "The advantage of experienced start-up founders in venture capital acquisition: evidence from serial entrepreneurs," Small Business Economics, Springer, vol. 36(2), pages 187-208, February.
    9. Neill Stern & Metcalf Lynn & York Jonathan L., 2015. "Seeing What Others Miss: A Study of Women Entrepreneurs in High-Growth Startups," Entrepreneurship Research Journal, De Gruyter, vol. 5(4), pages 293-322, October.
    10. Sabrina Artinger & Nir Vulkan & Yotam Shem-Tov, 2015. "Entrepreneurs’ negotiation behavior," Small Business Economics, Springer, vol. 44(4), pages 737-757, April.
    11. Kathryn L. Shaw & Anders Sørensen, 2017. "The Productivity Advantage of Serial Entrepreneurs," NBER Working Papers 23320, National Bureau of Economic Research, Inc.
    12. Hannu Tervo, 2014. "Who turns to entrepreneurship later in life? - Push and pull in Finnish rural and urban areas," ERSA conference papers ersa14p236, European Regional Science Association.

    More about this item

    Keywords

    Firm-founding experience; Serial entrepreneur; Venture capital; G24; L26; M13;

    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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