Cognitive proximity, business cycles, and the fate of VC-backed startups: evidence from a worldwide 34-year-long dataset

<p>To estimate the influence of proximities on VC-backed startups&#39; fate, we extracted data on startups and their VC investors over 34 years between 1980 and 2014. The data were extracted from Dow Jones&rsquo; VentureSource data platform. They cover VC deals in sixty-eight countries worldwide. We selected only startups financed by a VC round at least once in their lifetime. They belong to twenty-four industrial sectors (GICS 3-digit). We collected the available information on their financing rounds, investors and investment types, industry segments, and localization. For each startup in the dataset, we obtained information on VC funding rounds (&ldquo;seed, 1st, 2nd, &hellip;, 9th, later, restart&rdquo;) and on other sources of new funding, such as private equity investments and debt funding. Some of these funding rounds are exit events: acquisitions, mergers, IPOs or SPOs, and court liquidations. When VC investors liquidate their investments, and some new non-VC investors take over, the company is no longer VC-backed; thus, it is no longer tracked in the database. Consequently, the dataset exhibits a duration/survival structure: startups in the cross-sectional dimension but funding or exit event dates instead of calendar dates in the longitudinal dimension. The sample covers 51,969.</p>