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Reducing Information Frictions in Venture Capital: The Role of New Venture Competitions / Sabrina T. Howell.
- Format:
- Book
- Author/Creator:
- Howell, Sabrina T.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w23874.
- NBER working paper series no. w23874
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Reducing Information Frictions in Venture Capital
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2017.
- Summary:
- Venture capital, an important source of financing for potentially high-growth new businesses, is believed to suffer from information frictions. This paper quantifies the magnitude of these frictions among participants in new venture competitions. In a regression discontinuity design with data from 87 competitions, winning a round increases the chances of external financing by about 35 percent. Winning is most impactful for ventures ranked just above the cutoff but that receive no cash prize, and judge ranks strongly predict venture success. The results indicate that information problems in new venture finance are large, and competitions can help resolve them through certification.
- Notes:
- Print version record
- September 2017.
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