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The impact of accelerators, angel investors, media and governments on the likelihood of receiving venture capital funding

Busch, J. (2018) The impact of accelerators, angel investors, media and governments on the likelihood of receiving venture capital funding.

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Abstract:A start-up can be seen as legitimate if other actors see the venture as desirable, proper, or appropriate. A significant body of research has examined how start-ups gain legitimacy and how gaining legitimacy affects their access to resources, such as funding. However, less research has focussed on how reputable actors can provide start-ups with legitimacy in the eyes of different audiences. Based on prior research we argue four reputable actors to have an effect on the certification of start-ups in the eyes of external stakeholders, thereby increasing their chances of receiving VC funding. These are: the media, business accelerators, angel investors and governments. This paper quantitatively investigates these effects using a binary logistic regression to assess whether non-VC-backed and VC-backed start-ups differ in terms of their affiliations with our proposed actors. Our sample consists of 183 start-up funding deals in the Netherlands, in the years 2015, 2016 and 2017. Our findings suggest that government funding and positive media coverage increases the likelihood of a start-up receiving VC funding, whereas having an angel investor on board decreases the likelihood of receiving VC funding. Furthermore, after combining our four different actors, the predictive power of our model improves significantly. Our results contribute to the existing legitimacy theory as they show how affiliations by different actors can positively or negatively legitimise a start-up in the eyes of a VC.
Item Type:Essay (Master)
Clients:
Golden Egg Check, Enschede, Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:https://purl.utwente.nl/essays/76796
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