Work from home amenability and venture capital financing during COVID-19

Jagriti Srivastava and Balagopal Gopalakrishnan

Applied Economics, 2022, vol. 54, issue 44, 5073-5098

Abstract: This paper examines the impact of COVID-19 on venture capital financing of firms. We find a significant shift in the profile of firms that obtain venture capital financing during the pandemic-induced economic crisis. Firms in industries that are more amenable to work from home obtain greater amounts of financing. Growth-stage firms operating in amenable industries are able to obtain higher financing than early-stage firms. The higher financing obtained by firms in amenable industries is driven by venture capital funds focused on the domestic market. Additionally, the higher financing is obtained from a single venture capital investor rather than a consortia of investors. Taken together, the preference of venture capital funds indicate a less risk-averse behavior in financing firms amenable to remote working. The findings of our study using monthly firm-level data provide insights on venture capital financing during the pandemic.

Date: 2022
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DOI: 10.1080/00036846.2022.2041175

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