Venture Labor: A Nonfinancial Signal for Start-up Success
Sean Cao1, Jie He2, Zhilu Lin3, Xiao Ren4
1University of Maryland; 2University of Georgia; 3Clarkson University; 4Chinese University of Hong Kong, Shenzhen
We examine an emerging phenomenon that talented employees leave successful entrepreneurial firms to join less mature start-ups. Using proprietary person-level data and private firm data, we find that the presence of these “serial venture employees” positively predicts their new employers’ future success in terms of exit likelihoods, size growth, venture capital financing, and innovation productivity. Such predictive power is more likely driven by a screening/matching channel rather than venture labor’s nurturing role. Our paper sheds light on an underexplored pattern of inter-firm labor flow, which provides a nonfinancial yet value-relevant signal about private firms for investors and stakeholders.