TY  - JOUR
AU  - Kerr,William R.
AU  - Lerner,Josh
AU  - Schoar,Antoinette
TI  - The Consequences of Entrepreneurial Finance: A Regression Discontinuity Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15831
PY  - 2010
Y2  - March 2010
UR  - http://www.nber.org/papers/w15831
L1  - http://www.nber.org/papers/w15831.pdf
N1  - Author contact info:
William R. Kerr
Harvard Business School
Rock Center 212
Soldiers Field
Boston, MA 02163
Tel: 617/496-7021
E-Mail: wkerr@hbs.edu

Josh Lerner
Harvard Business School
Rock Center 214
Boston, MA 02163
Tel: 617/495-6065
Fax: 617/496-7357
E-Mail: jlerner@hbs.edu

Antoinette Schoar
MIT Sloan School of Management
100 Main Street, E62-638
Cambridge, MA  02142
Tel: 617/253-3763
Fax: 617/258-6855
E-Mail: aschoar@mit.edu
M2  - featured in NBER digest on 2010-07-01
AB  - This paper documents the role of angel funding for the growth, survival, and access to follow-on funding of high-growth start-up firms. We use a regression discontinuity approach to control for unobserved heterogeneity between firms that obtain funding and those that do not. This technique exploits that a small change in the collective interest levels of the angels can lead to a discrete change in the probability of funding for otherwise comparable ventures. We first show that angel funding is positively correlated with higher survival, additional fundraising outside the angel group, and faster growth measured through growth in web site traffic. The improvements typically range between 30% and 50%. When using the regression discontinuity approach, we still find a strong, positive effect of angel funding on the survival and growth of ventures, but not on access to additional financing. Overall, the results suggest that the bundle of inputs that angel investors provide have a large and significant impact on the success and survival of start-up ventures.
ER  -