Abstract: I study whether access to return-based crowdfunding decreases the importance of local financial market development for entrepreneurial activities. Using both the staggered adoption of intrastate equity crowdfunding across U.S. states and the 2016 passage of Regulation CF, I find that access to crowdfunding increases the number of business applications, and this effect is stronger in states where local financial markets are less developed. I also find that by reducing local bias in entrepreneurship, intrastate crowdfunding benefits entrepreneurs who work in states where they were not born. Interestingly, intrastate crowdfunding, but not Regulation CF, increases the number of business applications that turn into employer businesses. While intrastate crowdfunding increases job creation and self-employment and decreases job destruction, Regulation CF decreases establishment entry and exit. Overall, the findings suggest that financial innovation mitigates the frictions entrepreneurs face in access to financing.

Presentations: University of Michigan Brownbag Seminar (2022), WEFI PhD Workshop (2022), Young Scholars Finance Consortium (2023), FMA 2023 Annual Meeting, AFA 2024 Annual Meeting (Scheduled), FARS 2024 Midyear Meeting (Scheduled)

Abstract: Geographical clustering is an essential feature of the venture capital (VC) industry as proximity helps VCs to acquire soft information about early-stage companies and to conduct post-investment activities. However, whether the VC investment model based on in-person interactions is still justified in the age of online communication technologies remains an open question. In this paper, we address this question by using an unexpected interruption in face-to-face meetings during the recent pandemic. We document that VCs respond to this change by breaking their traditional norm: they invest in more distant startups. We find that this evolution goes along with selection criteria and syndication process changes despite some persisting behaviors. Thus, our study helps to understand how VCs revisit their investment model and sheds light on the value of in-person interactions for the VC industry.  

Presentations: Private Capital Symposium at London Business School (2023), 5th Future of Financial Information Conference at HEC Paris (2023), Columbia Private Equity Conference (2023), AFA PhD Student Poster Session (2023), Conference on Remote Work at Stanford University (2022), HEC Paris Finance PhD Workshop (2022), WEFI PhD Workshop (2022), IESE Brownbag Seminar (2022), Imperial College Seminar (2022), SFI-USI Summer School (2022)

Coverage: Private Equity Findings by Coller Capital (2023)

Abstract: Using a hand-collected data set on the Regulation A+ filings, I provide detailed information on the age, size, number of employees, financial statement items, and industrial and geographical distributions of companies that use Regulation A+. Testing the effect of Regulation A+ on the local economy, I find that the amount raised through this method of financing is negatively associated with ensuing unemployment rate. In addition, I investigate whether this new method of financing is substituting or complementing venture capital (VC) financing. The data analysis shows that Regulation A+ facilitates access to financing in regions and industries that could not attract VC-financing ex-ante. Finally, I find evidence consistent with successful Regulation A+ offerings in a region attracting ensuing VC investments through decreasing uncertainty and search cost.

Presentations: University of Michigan Brownbag Seminar (2021), WEFI PhD Workshop (2021)