Download This PaperMi Casa Es Tu Casa: Immigrant Entrepreneurs as Pathways to Foreign Venture Capital Investments
57 Pages Posted: 25 Feb 2019 Last revised: 28 Apr 2021
Date Written: October 20, 2020
Abstract
Venture capital firms predominantly source investments from local networks within tight geographic bounds. Against that pattern, VCs are increasingly investing internationally—but with substantial heterogeneity across firms in extent, location, and success. We propose a mechanism to explain this: ties to immigrant entrepreneurs. VCs form such ties differentially by investing in domestic startups led by immigrants, whose knowledge and connections facilitate investments in their homelands. We validate this idea through a study of U.S. VC in India. Firms invest in more Indian startups as their ties to Indian immigrants in the U.S. increase, particularly in the Indian region where immigrants originate and when the VC faces greater domestic competition. Those ties also enhance the odds of successful exit for the VCs Indian investments.
Keywords: Immigration, Venture Capital, Foreign Investment, Entrepreneurship, Cross-Border Knowledge Transfer, Global Networks
JEL Classification: F21, F22, F23, M16
Suggested Citation: Suggested Citation
Exequiel Hernandez (Contact Author)
University of Pennsylvania - The Wharton School ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States