Pathways to Success: The Interplay of Industry and Venture Capital Clusters in Entrepreneurial Company Exits

Saurabh Ahluwalia () and Sul Kassicieh
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Saurabh Ahluwalia: Anderson School of Management, University of New Mexico, Albuquerque, NM 87131, USA
Sul Kassicieh: Anderson School of Management, University of New Mexico, Albuquerque, NM 87131, USA

JRFM, 2024, vol. 17, issue 4, 1-16

Abstract: This study investigates the dynamics within entrepreneurial ecosystems, focusing on the influence of venture capital (VC) financing clusters and industry clusters on startup success. VC financing clusters, geographic hubs with intense VC funding activities, and industry clusters, regions with concentrated sector-specific firms, are integral components. Expanding existing research that links proximity to these clusters with successful exits through mergers and acquisitions (M&A), our study includes initial public offerings (IPOs) as a vital exit strategy. Results show that affiliations with venture capitalists in prominent VC financing clusters enhance M&A and IPO success for startups. Intriguingly, startups in industry strongholds exhibit a greater likelihood of M&A success, but, this effect is not seen for IPO exits. Additionally, the absence of startup co-location with venture capitalists in VC financing hubs does not impact IPO exits but hinders M&A success. These nuanced insights highlight the complex relationships within entrepreneurial ecosystems and underscore the need for tailored perspectives considering diverse exit pathways.

Keywords: startup financing; financial institutions; venture capital; financing clusters; industry clusters; startup exits (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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