Technifying Ventures

What is the relationship between advanced technology adoption, venture capital (VC) funding, employment, and growth? Using US Census Bureau microdata, the analysis shows both factors are independently and positively associated with firm outcomes, but their combination matters most. VC backing is concentrated among a small group of firms that experience large employment gains post-funding. In contrast, advanced technology is adopted by a broader range of firms, which see smaller post-adoption employment increases. A startup model is calibrated with firm-level data to study reallocation effects associated with tax and subsidy changes, and quantify the economic roles of VC and advanced technology.