Date of this Version
Journal of Business Venturing
We document the role of entrepreneurial founder and venture capital (VC) partner co-ethnicity in shaping investment relationships. Co-ethnicity increases the likelihood that a VC firm invests in a company. Conditional on investment, co-ethnicity strengthens the degree of involvement by raising the likelihood of VC board of director involvement and increasing the size and scope of investment. These results are consistent with trust and social-network based mechanisms. Shared ethnicity in our sample is associated with worse investment outcomes as measured by investment liquidity, however, which our results suggest might stem from looser screening and/or corporate governance.
© 2015. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/.
venture capital, ethnic matching
Bengtsson, O., & Hsu, D. H. (2015). Ethnic Matching in the U.S. Venture Capital Market. Journal of Business Venturing, 30 (2), 338-354. http://dx.doi.org/10.1016/j.jbusvent.2014.09.001
Date Posted: 27 November 2017
This document has been peer reviewed.