Gonzalez-Uribe, Juanita ORCID: 0000-0002-1945-7372, Klingler-Vidra, Robyn, Wang, Su and Yin, Xiang
(2025)
The broader role of venture capital due diligence.
Annual Review of Financial Economics.
ISSN 1941-1367
(In Press)
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Text (Due diligence final version (002))
- Accepted Version
Pending embargo until 1 January 2100. Available under License Creative Commons Attribution. Download (4MB) |
Abstract
Analyzing approximately 2,000 applicants to a UK seed fund, this study examines how venture capital (VC) due diligence affects startup outcomes independent of funding decisions. Leveraging random reviewer assignment, we find that due diligence increases two-year growth but lowers continuation rates among non-funded applicants, reflecting a dynamic of accelerated scaling or exit. Evidence points to a learning mechanism: due diligence exposes founders to advanced website technologies, prompting capability-building in digital skills. Firms selected for due diligence adopt these technologies, even before raising external capital. The findings highlight VC due diligence as a formative process influencing startups beyond the funded few.
Item Type: | Article |
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Additional Information: | © 2025 The Author(s) |
Divisions: | Finance |
Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HG Finance H Social Sciences > HB Economic Theory |
JEL classification: | J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity M - Business Administration and Business Economics; Marketing; Accounting > M1 - Business Administration > M13 - Entrepreneurship |
Date Deposited: | 01 Sep 2025 10:33 |
Last Modified: | 01 Sep 2025 14:30 |
URI: | http://eprints.lse.ac.uk/id/eprint/129338 |
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