The Impact of Venture Capital Monitoring

S.  Bernstein; X.  Giroud; R.  Townsend

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Article | Journal of Finance

The Impact of Venture Capital Monitoring

by S. Bernstein, X. Giroud and R. Townsend

Format: Print

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Bernstein, S., X. Giroud, and R. Townsend. "The Impact of Venture Capital Monitoring." Journal of Finance 71, no. 4 (August 2016): 1591–1622.

About the Author

Shai Benjamin Bernstein

Associate Professor of Business Administration

Entrepreneurial Management

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Working Paper | HBS Working Paper Series | 2020

Does Venture Capital Attract Human Capital? Evidence from a Randomized Field Experiment

Shai Bernstein, Kunal Mehta and Richard Townsend

Attracting talent is widely believed to be critical to the success of a startup. In this paper, we investigate whether potential employee interest in a startup is affected by venture capital funding. We do so by analyzing a field experiment conducted on Angel-List Talent, a large online search platform for startup jobs. In the experiment, whether a startup was funded by top-tier VCs and/or whether it was funded recently is randomly highlighted in search results. We find that the same startup receives significantly more interest from potential employees when the fact that it was funded by a top-tier VC is highlighted. In contrast, highlighting the fact that a startup was funded recently has no effect. High-quality job candidates care the most about the identities of startup investors. The results provide direct evidence of the certification role played by VCs and their impact on the labor market.

Keywords: Startup; funding; Venture Capital; Business Startups; Employees; Attitudes;

Citation:
Bernstein, Shai, Kunal Mehta, and Richard Townsend. "Does Venture Capital Attract Human Capital? Evidence from a Randomized Field Experiment." Harvard Business School Working Paper, No. 21-049, October 2020. View Details

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The Impact of Venture Capital Monitoring

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