“Geography, Staging, and Venture Capital Financing” by Xuan TIAN
Author:
Xuan TIAN
Boston College
I provide evidence that entrepreneurial firms located closer to their investing venture capitalists (VCs) obtain different VC investment structures and subsequently outperform other entrepreneurial firms. Controlling for endogeneity problems, I find that firms located closer to their VCs receive fewer financing rounds, have a longer duration between successive investment rounds, receive larger investment amounts per round, have a higher chance of successful exit, and have a better operating performance in the IPO year. The findings suggest that proximity allows VCs to monitor more effectively and consequently improves firm performance.
