Economics
Access to venture capital and the performance of venture-backed start-ups in silicon valley
Document Type
Article
Abstract
This article examines start-ups' access to venture capital in Silicon Valley using a comprehensive database. The author finds that Silicon Valley consistently absorbs 20% to 26% of the total venture capital investment in the United States, and start-ups in this region benefit from the abundance of local venture capital. Venture-backed firms in Silicon Valley receive venture capital at a younger age and complete more rounds of financing. On one hand, this better access to capital makes start-ups in Silicon Valley more likely than start-ups elsewhere to complete initial public offerings and helps offset some of the negative effects of intense competition in the region. On the other hand, better access to venture capital is associated with a higher bankruptcy rate, possibly because competition for new ventures makes it more likely that poor business plans will get funding. © 2007 Sage Publications.
Publication Title
Economic Development Quarterly
Publication Date
5-2007
Volume
21
Issue
2
First Page
124
Last Page
147
ISSN
0891-2424
DOI
10.1177/0891242406298724
Keywords
performance of start-ups, Silicon Valley, venture capital
Repository Citation
Zhang, Junfu, "Access to venture capital and the performance of venture-backed start-ups in silicon valley" (2007). Economics. 44.
https://commons.clarku.edu/faculty_economics/44
