January 2014
Article
Review of Financial Studies

The Consequences of Entrepreneurial Finance: Evidence from Angel Financings

By: William R. Kerr, Josh Lerner and Antoinette Schoar

Format:Print

Abstract

This paper documents that ventures that are funded by two successful angel groups experience superior outcomes to rejected ventures: they have improved survival, exits, employment, patenting, web traffic, and financing. We use strong discontinuities in angel funding behavior over small changes in their collective interest levels to implement a regression discontinuity approach. We confirm the positive effects for venture operations, with qualitative support for a higher likelihood of successful exits. On the other hand, there is no difference in access to additional financing around the discontinuity. This might suggest that financing is not a central input of angel groups.

Keywords

Business Ventures; Financing and Loans; Interests; Employment; Patents; Internet and the Web; Operations; Entrepreneurship; Business Exit or Shutdown

Citation

Kerr, William R., Josh Lerner, and Antoinette Schoar. "The Consequences of Entrepreneurial Finance: Evidence from Angel Financings." Review of Financial Studies 27, no. 1 (January 2014): 20–55.