Human Capital Single Founder and Accelerator effects on Performance of New Venture Firms

Abstract

This thesis delved into the two dominant aspects of technology based new venture firms i.e. human capital and the external network capacities on funding, growth, acquisition and survivability of new venture firms. This thesis compared new venture firms from both developing and developed economies. Funding is one of the most important constituents of resource acquisition that sustains and helps a new venture during the initial and future growth stages. Multiple factors such as human capital, amount raised in the first round, innovation and so on impact the funding prospect of new ventures. This work explored the influencing factors that drive multiple rounds of funding for new venture firms and provided a much broader perspective of funding drivers during the early stages of the new venture firm. Using signaling theory and human capital theory, this work analysed signals that influence the acquisition of funds in the first round and checked whether those signals persisted for the second and third rounds of funding when information asymmetries between the investors and new venture firms reduce. The human capital factors that were the primary focus of our work included: premier institute education, prior startup experience, industry experience and founder count. The study disentangled the signaling effects of the human capital factors across three funding rounds and proved the diminishing value of signals across each subsequent round of funding. Findings concluded that the signal effect from premier institute education was the only human capital signal that persisted across each round of funding while other signals did not persist beyond the first round of funding. In addition, new venture firms with founders educated from premier educational institutes were able to attract more investors and close more funding rounds. In terms of fund acquisition, the quantum of funds raised in the first round of funding positively impacted the amounts raised in the second and third rounds stressing its importance for new venture f