How do innovative internet tech startups attract venture capital financing?

Yan Zhou, Sangmoon Park, Justin Zuopeng Zhang and João J. Ferreira

Journal of Management & Organization, 2025, vol. 31, issue 3, 1367-1388

Abstract: This research uses signaling theory to combine the perspective of investment results with existing venture capital (VC) standards and reexamines the factors that influence the attractiveness of innovative internet tech startups to VC from the perspective of equal opportunity startups. Taking the financing status of 310 startups in China's sharing economy as an example and using regression analysis, we empirically test the influence of entrepreneur and firm characteristics on attracting VC. Our results show that among founder characteristics, the entrepreneur's entrepreneurial experience alone is insufficient to attract VC. Industrial experience and political background have a positive influence on attracting VC. Among firm characteristics, market-entry order and business group (BG) affiliation positively influence attracting VC. This is a new and relevant discovery. In the Chinese market, investors are more inclined to provide financial support to entrepreneurs or startups that have already gained legitimacy from the government or business groups.

Date: 2025
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