The Social Capital of Venture Capitalists and Its Impact on the Funding of Start-Up Firms

How does the social capital of venture capitalists (VCs) affect the funding of start-ups? Extant entrepreneurship literature conceptualizes a substitute effect between the social and financial capital that new firms attain from their investors. On the contrary, by building on the rich social capital literature, we hypothesize a positive effect of VCs’ social capital, derived from past syndication, on the amount of money that start-ups receive. Specifically, we argue that both structural aspects of VCs’ social network, such as the number of connections and the spanning of structural holes, and relational aspects, such as the diversity of network partners’ attributes, provide VCs with superior access to information about current investment objects and opportunities to leverage them in the future, increasing their willingness to invest in these firms. Our empirical results, derived from a novel dataset containing more than 5,000 funding rounds in the Internet and IT sector, strongly confirm our hypotheses. Both structural and relational attributes of VCs’ syndication networks have a significant influence on the funds received by start-up firms, highlighting the importance of a social capital perspective on new venture funding. We discuss the implications of our findings for theories of venture capital and entrepreneurship, showing that the role and effect of VCs’ social capital on start-up firms is much more complex than previously argued in the literature.social networks;social capital;start-ups;venture capital;structural holes

Managing Unsolicited Ideas for R&D

Existing academic and popular literature suggests that unsolicited ideas, the non-contractual and voluntary submission of innovation-related information from external sources to the firm, offer the promise of a bountiful and low-cost tool to sustain and extend firms' R&D efforts. Yet, in practice, many organizations find it difficult to deal with unsolicited ideas because of high quantity, low quality, and the need to transfer IP ownership. This article identifies a range of practices that allow organizations to meet these challenges and therefore realize some of the potential of unsolicited ideas for R&D

Going Off-Piste: The Role of Status in Launching Unsponsored R&D Projects

Many established organizations rely on unsponsored R&D projects to sustain and support corporate renewal. These ideas that emerge from dark corners of the organization are often the result of inventors’ proactive creative efforts. Yet, little is known about the origins of these creative efforts, and what drives individuals to decide for or against engagement in such behavior. Building on the notion of middle-status conformity, we argue for the existence of a curvilinear (U-shaped) relationship between inventors’ status and their participation in autonomous inventive efforts. We argue that this effect is further moderated by factors influencing the salience of existing status-granting institutions, specifically the novelty of the technological domain of the invention, the competitive position of the wider organization, and the inventors’ geographic location. Using a unique dataset of invention disclosures from a global technology-based firm, we find general support for our hypotheses. We propose implications for theories of innovation, networks, and status that add to our understanding of proactive forms of creative effort

The best of both worlds: The benefits of open-specialized and open-diverse syndication networks for new venture success

Open networks give actors non-redundant information that is diverse, while closed networks offer redundant information that is easier to interpret. Integrating arguments about network structure and the similarity of actors’ knowledge, we propose two types of network configurations that combine diversity and ease of interpretation. Closed-diverse networks offer diversity in actors’ knowledge domains and shared third-party ties to help in interpreting that knowledge. In open-specialized networks, structural holes offer diversity, while shared interpretive schema and overlap between received information and actors’ prior knowledge help in interpreting new information without the help of third parties. In contrast, actors in open-diverse networks suffer from information overload due to the lack of shared schema or overlapping prior knowledge for the interpretation of diverse information, and actors in closed-specialized networks suffer from overembeddedness because they cannot access diverse information. Using CrunchBase data on early-stage venture capital investments in the U.S. information technology sector, we test the effect of investors’ social capital on the success of their portfolio ventures. We find that ventures have the highest chances of success if their syndicating investors have either open-specialized or closed-diverse networks. These effects are manifested beyond the direct effects of ventures’ or investors’ quality and are robust to controlling for the possibility that certain investors could have chosen more promising ventures at the time of first funding

Social capital of venture capitalists and start-up funding

How does the social capital of venture capitalists (VCs) affect the funding of start-ups? By building on the rich social capital literature, we hypothesize a positive effect of VCs' social capital, derived from past syndication, on the amount of money that start-ups receive. Specifically, we argue that both structural and relational aspects of VCs' social networks provide VCs with superior access to information about current investment objects and opportunities to leverage them in the future, increasing their willingness to invest in these firms. Our empirical results, derived from a novel dataset containing more than 1,500 first funding rounds in the Internet and IT sector, strongly confirm our hypotheses. We discuss the implications of our findings for theories of venture capital and entrepreneurship, showing that the role and effect of VCs' social capital on start-up firms may be more complex than previously argued in the literature

Effects of early feeding on growth velocity and overweight/obesity in a cohort of HIV unexposed South African infants and children

BACKGROUND: South Africa has the highest prevalence of overweight/obesity in Sub-Saharan Africa. Assessing the effect of modifiable factors such as early infant feeding on growth velocity and overweight/obesity is therefore important. This paper aimed to assess the effect of infant feeding in the transitional period (12 weeks) on 12–24 week growth velocity amongst HIV unexposed children using WHO growth velocity standards and on the age and sex adjusted body mass index (BMI) Z-score distribution at 2 years. METHODS: Data were from 3 sites in South Africa participating in the PROMISE-EBF trial. We calculated growth velocity Z-scores using the WHO growth standards and assessed feeding practices using 24-hour and 7-day recall data. We used quantile regression to study the associations between 12 week infant feeding and 12–24 week weight velocity (WVZ) with BMI-for-age Z-score at 2 years. We included the internal sample quantiles (70th and 90th centiles) that approximated the reference cut-offs of +2 (corresponding to overweight) and +3 (corresponding to obesity) of the 2 year BMI-for-age Z-scores. RESULTS: At the 2-year visit, 641 children were analysed (median age 22 months, IQR: 17–26 months). Thirty percent were overweight while 8.7% were obese. Children not breastfed at 12 weeks had higher 12–24 week mean WVZ and were more overweight and obese at 2 years. In the quantile regression, children not breastfed at 12 weeks had a 0.37 (95% CI 0.07, 0.66) increment in BMI-for-age Z-score at the 50th sample quantile compared to breast-fed children. This difference in BMI-for-age Z-score increased to 0.46 (95% CI 0.18, 0.74) at the 70th quantile and 0.68 (95% CI 0.41, 0.94) at the 90th quantile . The 12–24 week WVZ had a uniform independent effect across the same quantiles. CONCLUSIONS: This study demonstrates that the first 6 months of life is a critical period in the development of childhood overweight and obesity. Interventions targeted at modifiable factors such as early infant feeding practices may reduce the risks of rapid weight gain and subsequent childhood overweight/obesity.Scopu