Early teams: The impact of team demography on VC financing and going public

Abstract

This study investigates how top management team (TMT) demographic characteristics affect firm outcomes for young high technology firms in Silicon Valley. We study how team composition and turnover shape an entrepreneurial firm's ability to attract venture capital and its ability to successfully complete an initial public offering. We find that broad access to information by virtue of having top management team members that have worked for many different employers (diverse prior company affiliations) and have diverse prior experiences (functional diversity) tend to be associated with positive outcomes. In addition, entrants to and founder exits from the TMT increase the likelihood that a firm achieves an IPO. TMT exits, in turn, reduce the likelihood of achieving an IPO. Results also suggest that prior human capital experience is consistently associated with positive firm outcomes. These findings suggest that team experiences, composition and turnover are all important 0883-9026/$ -see front matter D

Small worlds, infinite possibilities? How social networks affect entrepreneurial team formation and search

“…Comparisons of research fi ndings with models implied by theory allows us to improve the models and ultimately to build better theory. such as Beckman, Burton, and O'Reilly's (2007) paper on the gains to new ventures from founding team members' career histories. In this paper, we extend social network concepts and principles to the early stages of a fi rm's life, focusing on the team formation and resource mobilization strategies in new ventures.…”

The role of referrals in financing technology-based ventures

“…However, since entrepreneurial teams are more relevant in the context of VC, as opposed to ventures started by individual entrepreneurs, we chose to take the entrepreneurial team as a unit of analysis. This is in line with previous studies of prior experience in the context of VC (e.g., Beckman, Burton, & O'Reilly, 2007;. Therefore, in the hypotheses section, we mainly build on the findings in VC literature that focus on the team level.…”

“…Previous studies have shown that more experienced entrepreneurial teams have fewer difficulties in acquiring financial capital (e.g., Beckman, Burton, & O'Reilly, 2007;Cohen & Dean, 2005;. This paper is specifically interested in the effects of two types of experience on the investment decision of the venture capitalist: the start-up experience and the functional experience of the entrepreneurial team.…”

Nascent ventures competing for start-up capital: Matching reputations and investors

“…The importance of corporate reputation in attracting investment capital has been firmly established (Stuart et al, 1999;Certo, 2003). In addition, the reputation of key individuals or core members affiliated with an organization has been found to play a similar role (Tyebjee and Bruno, 1981;Gorman and Sahlman, 1989;Muzyka et al, 1996;Cohen and Dean, 2005;Franke et al, 2006Franke et al, , 2008Beckman, Burton and O'Reilly, 2007;Pollock et al, 2010).…”

“…Our study focuses on the effect of performance-based reputations of a new venture's founding members on different types of potential investment capital providers. We build specifically on studies that investigate the impact of top management team characteristics on investor behavior (Tyebjee and Bruno, 1981;Gorman and Sahlman, 1989;Muzyka et al, 1996;Cohen and Dean, 2005;Henkel, 2006, 2008;Beckman, Burton and O'Reilly, 2007;Pollock, Chen, Jackson and Hambrick, 2010).…”