Matching in entrepreneurial finance networks. Issue 2 (3rd July 2019)

• Record Type: Journal Article
• Authors: Pasquini, Ricardo A.; Robiolo, Gabriela; Sarria Allende, Virginia
• Is Part Of: Venture capital. Volume 21:Issue 2/3(2019)
• Page Start: 195
• Page End: 221
• Publication Date: 2019-07-03
• Subjects: Entrepreneurial Finance -- networks -- matching game -- sorting -- investors -- startups; Venture capital -- Periodicals; Entrepreneurship -- Periodicals; 332.041
• DOI: 10.1080/13691066.2018.1457474
• Languages: English
• ISSNs: 1369-1066

Abstract

Abstract: We empirically explore the importance of networks in the match formation of startups and investors. Using a massive network of connections from the entrepreneurial finance setting in California, we estimate a matching model introducing network distance as a key determinant of the value of a prospective match. We find that distance drives matching value and moderates preferences for experience and education in the matching process. While we corroborate that there is significant sorting along these preferences in realized matches, our results indicate that network distance can potentially outweigh their impact, emphasizing the role of networks in alleviating matching frictions.