Working Papers

Presented at the EFA (2022), CICF (2022), SFS Cavalcade Asia-Pacific (2022), WEFI (2022), FMA (2022), FIRN (2022), FMA Asia Pacific (2022), FMCG (2022)

We examine how venture capitalists (VCs) adapt their financing strategies to support startups competing against deep-pocketed incumbents. Employing textual analysis to identify a startup's potential competitors, we show that when the competitors are cash-rich, VCs make their financing less conditional by providing more funding each round and evaluating the startup less on short-term performance. This approach requires VCs to rely more on continuous monitoring and liquidation protection, and is restricted to large funds and those with specialized experience. Our results suggest that, as large firms have gained greater financial power,  VCs serve as a counter-balancing force to sustain business dynamism.

Work in progress