Homophily, Information Asymmetry and Performance in the Angels Market

  title={Homophily, Information Asymmetry and Performance in the Angels Market},
  author={B. Venugopal},
  journal={Financial Accounting eJournal},
  • B. Venugopal
  • Published 2017
  • Business
  • Financial Accounting eJournal
Using unique hand-collected data on startups that were seed-funded by individual angel investors, I show that social connections between angels and entrepreneurs, obtained via schools, past employment and ethnicity, positively influence investment decisions of angels, and the subsequent performance of startups. Social connections, irrespective of the ranking of the school or employer they were formed, are crucial for obtaining early-stage startup financing particularly in markets with higher… Expand
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