Survival of the funded: Econometric analysis of startup longevity and success

PURPOSE: The existing literature on the success of startup enterprises is thorough in investigating individual factors, but relatively weak in testing those factors in combination. This research tests for interactive effects, i.e., complementarities, between those factors. METHODOLOGY: We use a Cox...

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Autores principales:	Daniel Keogh, Daniel K.N. Johnson
Formato:	article
Lenguaje:	EN
Publicado:	Nowy Sacz Business School National-Louis University 2021
Materias:	startup business survival venture financing human capital competitive advantage new ventures firm performance Management. Industrial management HD28-70 Business HF5001-6182
Acceso en línea:	https://doaj.org/article/7e22f71d936b4403b314c64905b5869d
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spelling	oai:doaj.org-article:7e22f71d936b4403b314c64905b5869d2021-11-18T09:46:05ZSurvival of the funded: Econometric analysis of startup longevity and success2299-732610.7341/20211742https://doaj.org/article/7e22f71d936b4403b314c64905b5869d2021-01-01T00:00:00Zhttps://jemi.edu.pl/uploadedFiles/file/all-issues/vol17/issue4/JEMI_Vol17_Issue4_2021_Article2.pdfhttps://doaj.org/toc/2299-7326PURPOSE: The existing literature on the success of startup enterprises is thorough in investigating individual factors, but relatively weak in testing those factors in combination. This research tests for interactive effects, i.e., complementarities, between those factors. METHODOLOGY: We use a Cox proportional hazard model to estimate longevity in startups, supplementing it with maximum likelihood estimation of two metrics of success (employment and revenue). In each model, we explicitly test for interactions between terms, thus advancing the literature. FINDINGS: Panel data analysis shows that financing strategy matters to startup success, especially when combined with specific human and social capital attributes of the founders. For example, angel investors and venture capital investors benefit differently from founders with industry experience; founders with higher educational achievement generate more revenue than their peers specifically when their startups collaborate in university partnerships. IMPLICATIONS FOR THEORY AND PRACTICE: The paper suggests specific ways in which entrepreneurs should think about financing options that are complementary with their founder attributes. Further, it suggests that the literature must be very thoughtful, not only about the indicators of success but about advice to policymakers, financiers and entrepreneurs because of the nuanced nonlinearities and interactions we demonstrate. ORIGINALITY AND VALUE: We contribute to the literature on startup financing with a large dataset, careful modelling of interactive complementarities of between inputs, correction of the potential sample selection bias in previous studies, and a suite of modelled outcomes (survival, employment, and revenue) which allow for nuanced results.Daniel KeoghDaniel K.N. JohnsonNowy Sacz Business School National-Louis Universityarticlestartupbusiness survivalventure financinghuman capitalcompetitive advantagenew venturesfirm performanceManagement. Industrial managementHD28-70BusinessHF5001-6182ENJournal of Entrepreneurship, Management and Innovation, Vol 17, Iss 4, Pp 29-49 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	startup business survival venture financing human capital competitive advantage new ventures firm performance Management. Industrial management HD28-70 Business HF5001-6182
spellingShingle	startup business survival venture financing human capital competitive advantage new ventures firm performance Management. Industrial management HD28-70 Business HF5001-6182 Daniel Keogh Daniel K.N. Johnson Survival of the funded: Econometric analysis of startup longevity and success
description	PURPOSE: The existing literature on the success of startup enterprises is thorough in investigating individual factors, but relatively weak in testing those factors in combination. This research tests for interactive effects, i.e., complementarities, between those factors. METHODOLOGY: We use a Cox proportional hazard model to estimate longevity in startups, supplementing it with maximum likelihood estimation of two metrics of success (employment and revenue). In each model, we explicitly test for interactions between terms, thus advancing the literature. FINDINGS: Panel data analysis shows that financing strategy matters to startup success, especially when combined with specific human and social capital attributes of the founders. For example, angel investors and venture capital investors benefit differently from founders with industry experience; founders with higher educational achievement generate more revenue than their peers specifically when their startups collaborate in university partnerships. IMPLICATIONS FOR THEORY AND PRACTICE: The paper suggests specific ways in which entrepreneurs should think about financing options that are complementary with their founder attributes. Further, it suggests that the literature must be very thoughtful, not only about the indicators of success but about advice to policymakers, financiers and entrepreneurs because of the nuanced nonlinearities and interactions we demonstrate. ORIGINALITY AND VALUE: We contribute to the literature on startup financing with a large dataset, careful modelling of interactive complementarities of between inputs, correction of the potential sample selection bias in previous studies, and a suite of modelled outcomes (survival, employment, and revenue) which allow for nuanced results.
format	article
author	Daniel Keogh Daniel K.N. Johnson
author_facet	Daniel Keogh Daniel K.N. Johnson
author_sort	Daniel Keogh
title	Survival of the funded: Econometric analysis of startup longevity and success
title_short	Survival of the funded: Econometric analysis of startup longevity and success
title_full	Survival of the funded: Econometric analysis of startup longevity and success
title_fullStr	Survival of the funded: Econometric analysis of startup longevity and success
title_full_unstemmed	Survival of the funded: Econometric analysis of startup longevity and success
title_sort	survival of the funded: econometric analysis of startup longevity and success
publisher	Nowy Sacz Business School National-Louis University
publishDate	2021
url	https://doaj.org/article/7e22f71d936b4403b314c64905b5869d
work_keys_str_mv	AT danielkeogh survivalofthefundedeconometricanalysisofstartuplongevityandsuccess AT danielknjohnson survivalofthefundedeconometricanalysisofstartuplongevityandsuccess
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Survival of the funded: Econometric analysis of startup longevity and success

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