Signaling for more money: The roles of founders' human capital and investor prominence in resource acquisition across different stages of firm development
By Eun-Jeong Ko, A. McKelvie. Journal of Business Venturing, 2018
228 citations recorded by the source corpus.
Abstract We use signaling theory to explain how new ventures effectively signal future prospects to acquire external resources. Based on a sample of 235 new ventures drawn from a unique dataset combining multiple sources, we examine the signals of founders' human capital (i.e., education, industry experience, and founding experience) and investor prominence and their influence on the amount of external funding received across two stages of venture funding. We find that founders' founding experience and education have the greatest effects for acquiring first-round financing, but in later stages, only the signaling effect from education remains. Furthermore, we find important interactions between founders' human capital and investor prominence in the second round of funding. By utilizing lagged funding information, we show that different types of signals have a dynamic and temporal impact on new ventures' resource acquisition, including the persistence of some signals and the temporariness of others.
Subfields: Accounting, Management of Technology and Innovation
View Paper: https://www.semanticscholar.org/paper/36d5fbd193475320c771d0927805514ef6456bf0
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Citations in the corpus
- Equity Crowdfunding and Governance: Toward an Integrative Model and Research Agenda (2019, unknown): “…success. entrepreneurs around the time of the equity crowdfunding campaign (e.g., Ahlers et al., 2015), entrepreneurial finance scholars have generally investigated signaling around specific events, including VC fundraising or an IPO (e.g., Certo, 2003; Colombo et al., 2019; Ko and McKelvie, 2018).”
- The Role of a Manager’s Intangible Capabilities in Resource Acquisition and Sustainable Competitive Performance (2019, background): “Moreover, it is argued that experience in business and industries enables top managers and founders to acquire both financial and non-financial external resources that are essential for the survival of new ventures [72].”
- The Use of Signals in New-Venture Financing: A Review and Research Agenda (2021, background): “Effective information signals in the context of VC financing constitute indicators of human capital (Beckman, Burton, & O’Reilly, 2007; Ko & McKelvie, 2018; Matusik, George, & Heeley, 2008; Nagy et al., 2012), preparedness (Chen et al., 2009), social capital (Shane & Cable, 2002), technological…”