Entry and growth of science-based technology firms: Deconstructing the process of resource accumulation

In my first essay, I study the relationship between capital demand and capital supply, measured at the time of firm entry, on entrants' performance. The results demonstrate that capital demand, measured at firms' entry, is the strongest predictor of firm valuation at the IPO. By contrast, capital supply, measured at firms' entry, is the strongest predictor of whether or not the firm achieves the IPO. In my second essay, I study how technology start-ups use pre-entry resources to gather financial capital at entry. I then examine how these pre-entry resources and newly acquired resources contribute to firm growth over time. To accomplish this analysis I use a two-stage model of firm entry and growth. Prior to entry, entrants are assumed to be endowed with a stock of scientific human capital and a stock of managerial human capital. Upon entry during the first stage, the firm acquires financial capital. In the second stage, the firm uses the human capital and the financial capital to grow. The model is estimated using a sample of more than seven hundred start-ups in three technology sectors and a novel database of background information on managers and board members academic achievement.