Work from home amenability and venture capital financing during COVID-19. Issue 44 (20th September 2022)

• Record Type: Journal Article
• Authors: Srivastava, Jagriti; Gopalakrishnan, Balagopal
• Is Part Of: Applied economics. Volume 54:Issue 44(2022)
• Page Start: 5073
• Page End: 5098
• Publication Date: 2022-09-20
• Subjects: COVID-19 -- venture capital -- financing -- work from home; Economics -- Periodicals; 330
• DOI: 10.1080/00036846.2022.2041175
• Languages: English
• ISSNs: 0003-6846

Abstract

ABSTRACT: This paper examines the impact of COVID-19 on venture capital financing of firms. We find a significant shift in the profile of firms that obtain venture capital financing during the pandemic-induced economic crisis. Firms in industries that are more amenable to work from home obtain greater amounts of financing. Growth-stage firms operating in amenable industries are able to obtain higher financing than early-stage firms. The higher financing obtained by firms in amenable industries is driven by venture capital funds focused on the domestic market. Additionally, the higher financing is obtained from a single venture capital investor rather than a consortia of investors. Taken together, the preference of venture capital funds indicate a less risk-averse behavior in financing firms amenable to remote working. The findings of our study using monthly firm-level data provide insights on venture capital financing during the pandemic.