The Consequences of Entrepreneurial Finance: Evidence from Angel Financings

By William R. Kerr, Josh Lerner, Antoinette Schoar. 2014

438 citations recorded by the source corpus.

This article documents the fact that ventures funded by two successful angel groups experience superior outcomes to rejected ventures: They have improved survival, exits, employment, patenting, Web traffic, and financing. We use strong discontinuities in angel- funding behavior over small changes in their collective interest levels to implement a regression discontinuity approach. We confirm the positive effects for venture operations, with qualitative support for a higher likelihood of successful exits. On the other hand, there is no difference in access to additional financing around the discontinuity. This might suggest that financing is not a central input of angel groups.

Subfields: Accounting, Management of Technology and Innovation

View Paper: https://www.semanticscholar.org/paper/f4ca4a6f63c1ea4c158a2c036494e604d2a66aab

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Management of Technology and Innovation

Citations in the corpus

A comparison of the effect of angels and venture capitalists on innovation and value creation (2016, background): “However, Kerr et al. (2011) examine ventures soliciting funds from two angel groups, and find that funded ventures have a higher likelihood of survival compared to those unable to secure angel investment.8 Below, we develop theoretical arguments about the relative contributions of angels and VCs to…”
Managing the Unknowable (2015, methodology): “…venture performance, as there is wide variation on which metrics are most indicative of general entrepreneurial performance during ongoing operations (Kerr, Lerner, and Schoar, 2011). newswires (such as CorpTech, VentureXpert, Dun & Bradstreet, and Hoover’s) as well as early-stage…”
Founder passion, neural engagement and informal investor interest in startup pitches: An fMRI study (2020, background): “Lacking established track records, early-stage entrepreneurs typically begin their approach with an initial elevator pitch (Chen et al., 2009; Kanze et al., 2018; Kerr et al., 2011).”
The Globalization of Angel Investments: Evidence across Countries (2015, neutral): “Following Kerr, Lerner, and Schoar (2014), we obtain 17 information on voting patterns of each of the angel groups to construct such a variable.”
Resources and Relationships in Entrepreneurship: An Exchange Theory of the Development and Effects of the Entrepreneur-Investor Relationship (2017, background): “Researchers have shown that ventures benefit from both financial (e.g.,Gompers& Lerner, 2001; Kaplan&Stromberg, 2001; Kerr et al., 2011) and social (e.g., Connor & Prahalad, 1996; Kogut & Zander, 1992) resources.”
Private equity investment criteria: An experimental conjoint analysis of venture capital, business angels, and family offices (2019, background): “As such, they are an important pillar of entrepreneurial finance and have become an important source of funding in recent years (Kerr et al., 2014; Hellmann and Thiele, 2015).”
A Review and Road Map of Entrepreneurial Equity Financing Research: Venture Capital, Corporate Venture Capital, Angel Investment, Crowdfunding, and Accelerators (2017, background): “Despite an impact that closely rivals or even exceeds formal VC and CVC in the field, research on angel investing remains comparatively sparse (Huang & Pearce, 2015; Kerr et al., 2014).”
The wisdom of the crowd in funding: information heterogeneity and social networks of crowdfunders (2018, background): “…signaling literature establish a positive relationship between early-stage investments and firm success (Bernstein et al. 2015a; Bosma et al. 2004; Kerr et al. 2014; Kortum and Lerner 2000; Samila and Sorenson 2010) and link an entrepreneur’s characteristics, such as human capital, to venture…”
The Effects of Business Accelerators on Venture Performance: Evidence from Start-Up Chile (2017, methodology): “This approach is similar to that used by previous studies such as Kerr, Lerner, and Schoar (2014), Goldfarb, Kirsch, and Miller (2007), and Hallen, Bingham, and Cohen (2016).”
Does financing spur small business productivity? Evidence from a natural experiment (2015, positive): “…of literature has documented how access to particular types of financing such as venture capital and angel financing can impact the survival and productivity of small and entrepreneurial firms (e.g., Puri and Zarutskie (2012), Chemmanur, Krishnan, and Nandy (2011), Kerr, Lerner, and Schoar (2013)).”
Clusters of Entrepreneurship and Innovation (2014, neutral): “Examples include Haltiwanger et al. (2013), Hurst and Pugsley (2011), Puri and Zarutskie (2012), Chemmanur et al. (2012), and Kerr, Lerner, and Schoar (2013).”
Inside the black box of outcome additionality: Effects of early-stage government subsidies on resource accumulation and new venture performance (2015, background): “Those applying for subsidies and those who do not likely differ in systematic non-observable ways, because subsidies are not randomly assigned but firms selfselect into applying for subsidies (Georghiou, 2002; Kerr et al., 2014).”
Agglomeration and Innovation (2014, neutral): “Klepper (2010) describes how a similar process occurred in the development of Detroit.”