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What Matters in Venture Capital? Evidence from Entrepreneurs’ Stated Preferences


  • We are grateful to TheFunded and Adeo Ressi for giving us access to the data and to Jessica Cheng, Alex Cody, Christine Dambra, and Hunter Diamond for providing valuable research assistance. An anonymous referee provided valuable insights. All remaining errors are our own.


We study how entrepreneurs evaluate the ability of different US venture capitalists (VCs) to add value to start-up companies. Analyzing a large data set of entrepreneurs’ stated preferences regarding VCs, we demonstrate that entrepreneurs view independent partnership VCs more favorably than other VC types (e.g., corporate, financial, and government sponsored VCs). Although entrepreneurs are able to correctly identify VCs with better track records, they do not believe them to be more desirable investors. We also find that an entrepreneur's rankings are affected by their overall exposure to VCs, emphasizing the role of experiential learning in the venture capital market.