Working Papers:

Entry and Specialization in the VC industry

Abstract: This paper documents a significant increase in sector specialization of Venture Capital (VC) investments in recent years. This increased specialization is a result of concentrated investments in software startups, following a technological shock that lowered the cost of entry and experimentation in that sector. Software startups now receive more than two-thirds of all new VC investments. Within software, the surge in specialization is mainly driven by the entry of new specialized VC funds. The increased concentration of VCs on software impacts startups in other technological areas that experience a relative reduction in VC activity. The results raise concerns about the potential crowding-out effects of VC specialization.

Presentations: Finance Joint Workshop Bocconi-USI Lugano (scheduled), SFI Job Market Workshop (scheduled), Politecnico di Milano School of Management (2023), NSE PhD Workshop (2023), HEC Finance PhD Workshop (2023), Swiss Finance Institute Research Days (2023)

From in-person to online: the new shape of the VC industry
with Liudmila Alekseeva, Caroline Genc, and Hedieh Rashidi Ranjbar

Abstract: This paper asks whether geographical clustering and in-person interactions are still essential features of the venture capital (VC) industry in the age of online communications. Exploring how VCs respond to an unexpected interruption in face-to-face meetings during the Covid-19 pandemic, we document that they break their traditional norm by investing in more distant startups. This evolution goes along with several changes in selection criteria and VCs' syndication process. Overall, our study reveals that online interactions cannot perfectly substitute for in-person meetings and helps us understand how VCs revisit their investment model. 

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

Coverage: Private Equity Findings by Coller Capital (2023).

Chapters: 

Innovating to Net Zero: Can Venture Capital and Startups Play a Meaningful Role?
with Ramana Nanda
Entrepreneurship and Innovation Policy and the Economy, Vol. 2, 2023

Abstract: We show that patents related to clean energy generation & storage, changes to industrial production, and carbon capture & sequestration (CCS)–where breakthroughs are seen as being particularly critical to addressing climate change–are more than twice as likely to cite fundamental science than other Net-Zero patents, highlighting their deep tech focus compared to innovation in areas such as energy efficiency, ICT and transportation. Interestingly, VC-backed firms have patents that are significantly more likely to cite fundamental science compared to other firms, including in these deep tech sectors. Net-Zero related patents granted to VC-backed firms are also three-to-five times more likely to be among the group of highest cited patents, indicating the distinctive nature of innovations commercialized by VC-backed firms. However, VC still accounts for a tiny share of all patents related to Net Zero, and the patenting focus of VC-backed firms has shifted away from deep tech in recent years. We discuss the growing literature on the potential frictions facing the commercialization of science-based deep tech innovations and also touch on potential solutions that might enable venture capital to play a more meaningful role in supporting the transition to Net Zero in the coming decades.