Abstract

This paper compares the funding dynamics of startup-firms located in “VC Centers” (Bay Area, Boston, New York), versus those that are situated outside these centers In doing so, we extend current literature that has predominantly explored the local and non-local (spatial geography) interactions of VCs and startups in and among these three regions. We also track the evolution of the spatial geography of startup-VC funding relationships and the performance of these startups as they progress through typical VC funding stages (seed, early, late). Intuitively it seems that, regardless of startup location, local VCs with strong regional networks would facilitate initial funding, while further expansion of the firm might necessitate the involvement of non-local VCs. While we do find some evidence of this, we also discover that even in the initial stages a mix of local and non-local investors can lead to better performance.

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