Abstract

We analyze the effects of founders' human capital and access to venture capital (VC) financing on the growth of new technology-based firms (NTBFs). In the empirical section, we consider a sample composed of 503 Italian NTBFs that operate both in manufacturing and services. In assessing the effects on growth of founders' human capital and VC investments, we resort to econometric models that duly take into account the allegedly endogenous nature of this latter variable. The econometric estimates show that VC financing has a large positive effect on growth. More interesting, the human capital of the founding team has both a direct positive effect on growth and an indirect effect mediated by the attracting of VC. Last, the human capital characteristics of founders explaining the growth of NTBFs that do not resort to VC financing lose their explanatory power for "VC-backed" firms, pointing to the important coaching and signaling functions performed by VC investors.