Investor heterogeneity and venture performance
Marwin Mönkemeyer,
Kathrin Rennertseder,
Henning Schröder
HFRC Working Paper Series | Version 04/2025
This study explores the link between investor heterogeneity represented on venture boards and firms' post-seed funding performance. We document a statistically and economically significant negative association of investor heterogeneity on both a firm's likelihood of obtaining new funding and the volume raised in new funding rounds. This suggest that investor heterogeneity decreases venture board efficacy and the quality of venture governance. The marginal impact of investor heterogeneity is non-linear and diminishing across a venture's funding life cycle. Our results remain robust after controlling for endogeneity issues and for alternative measures of investor culture.