Essays in entrepreneurial finance
Creators: name: Eghbali, Mahdi
Publisher: name: University of Iowa
Year: 2024
Subjects: Entrepreneurial Finance
Innovation
public abstract
Startups
Venture Capital
Entrepreneurship

description: This dissertation focuses on strategies that entrepreneurs use to start and grow a startup. The first chapter studies the link between entrepreneurial programs and types of founders. Specifically, it studies the return for entrepreneurs who participated in accelerator programs that require founders to give up equity to participate in the program compared to founders that graduated from accelerators that do not require equity. The second chapter qualifies the textual structure of ICOs’ white papers using natural language processing (NLP) following a methodology introduced by Toubia et al., (2021). The chapter focuses on the relationship between speed, volume, and circuitousness and the success of ICOs.
description: In Chapter 1, I exploit data on startups that graduated from accelerators that are heterogeneous in equity design. I study the dilemma of going big or staying small that has been challenging entrepreneurs to wisely decide whether to trade equity in exchange for capital investment and have a more valuable equity share or retain a majority equity stake and look for noteworthy opportunities in later stages. The major heterogeneity among accelerators that I focus on is equity investment and early-stage seed funding. Using matched sample analysis, I provide evidence that although participating in an equity-investment accelerator has beneficial effects on the post-accelerator performance of portfolio companies to reach the next round of fundraising faster, they raise less capital in 12-month, 18-month, and 24-month time horizons after graduation in comparison to graduates of equity-free accelerators. In fact, I find that founders with more years of corporate experience and higher-quality business ideas tend to shorten the path to success by participating in equity-investment accelerators. On the other hand, consistent with Hallen et al. (2020) who believe that a learning mechanism is the primary cause of accelerator effects on venture development, I find that, while ventures are heterogeneous and they learn at different rates and different depths, some entrepreneurs have already learned what to do, and it is accelerator equity design and seed investment that negatively impacts acceleration and slows down venture growth.
description: Chapter 2 exploits the content of white papers that are published by Initial Coin Offering (ICO) campaigns. We study information exchanged between ICOs and investors via disclosed information in 2149 ICO white papers. We employ natural language processing (NLP) to quantify the structure of white papers and demonstrate their contribution to the success of ICOs. Following the content analysis procedure by Toubia et al. (2021), we elicit information from ICO textual sources by calculating three measures namely, speed, volume, and circuitousness. Our findings show that ICO projects with a well-written white paper that disclose risk and routinely return to previously discussed topics (i.e., circuitousness) are likely to raise more funds. Consistent with this, white papers that cover more ground (i.e., volume) contribute positively to the successful outcomes of ICO fundraising campaigns. In contrast, white papers that transit quickly between topics (i.e., speed) are less likely to have a positive impact.