The Advantage of Experienced Start-Up Founders in Venture Capital Acquisition: Evidence from Serial Entrepreneurs

Junfu Zhang

No 2964, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: firm-founding experience; serial entrepreneur; venture capital (search for similar items in EconPapers)
JEL-codes: G24 M13 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2007-07
New Economics Papers: this item is included in nep-bec, nep-cse and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Small Business Economics, 2011, 36(2), 187-208

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Journal Article: The advantage of experienced start-up founders in venture capital acquisition: evidence from serial entrepreneurs (2011)
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