From In-Person To Online: The New Shape of the VC Industry

Liudmila Alekseeva, Silvia Dalla Fontana, Caroline Genc and Hedieh Rashidi Ranjbar

No 778792, Working Papers of Department of Management, Strategy and Innovation, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven

Abstract: This paper asks whether, in the age of online communications, geographical clustering and in-person interactions are still essential for the soft information collection by venture capital (VC) investors. Through event study and difference-in-differences analyses, we show that VCs break their traditional norm and invest in more distant startups, following an interruption of in-person interactions. This evolution goes along with changes in selection criteria and VCs' syndication process. Overall, our study reveals that online interactions cannot perfectly substitute for in-person meetings and helps us understand how VCs revisit their investment model and balance out the risks of remote investing.

Date: 2025-02-16
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Persistent link: https://EconPapers.repec.org/RePEc:ete:msiper:778792

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