Startup to IPO: Understanding Changes in Key Personnel in Technology-based Startups through a Longitudinal Open-Source Database

University Of California-Davis, Davis CA

Investigators

Abstract

Venture capital-financed, technology-based entrepreneurial firms (VTEFs) are widely acknowledged to be among the most dynamic firms in the U.S. economy. Yet, with only a very few exceptions, little is known about the how these firms evolve. This project uses a novel data collection method -- extracting information from the Internet archiving website, "The Wayback Machine," which since 1996 has periodically visited websites and preserved them in searchable form -- to compile data from 600 VTEFs that made a public stock offering between 1996 and 2014 and 600 comparable VTEFs that did not complete a public offering during this period. Information about the names and biographies of the management team, investors, scientific advisors, firm description, and location from "The Wayback Machine" will be combined with dates of venture capital funding and information from the Dataverse patent database to build histories of each firm. The result will be a comprehensive history of the composition of firm management teams, the firm's self-description, the headquarters' location, and evolving managerial roles of the founders as these firms are formed, receive venture capital, and, finally, fail, survive, or have an initial public offering of stock. Firm growth is based upon the capabilities the founder(s) bring, those resources recruited from the environment (personnel, venture capital, etc.), and those assets built internally (patents etc.). With a few important exceptions, however, the dynamics of this firm-building process is largely a black box. The database that this project builds will open this black box. Among the topics to be examined are: When in the firm's evolution is the position of Chief Financial Officer filled? Is there a pattern to when key Top Management Team (TMT) members are added to the firm? When are founders replaced or are they relocated within the firm, e.g., from CEO to CTO? Do TMT and Board of Director changes vary by technology, region, or by fate of the firm, e.g., acquisition, bankruptcy, or IPO? Recently, public policy debates have wondered why women are under-represented in entrepreneurial firms. This project allows gender identification of all managers and board members for each firm. With this data, we can track gender issues from the firm's founding to an IPO or other liquidity event. The ability to address these empirical questions can test and improve current theories of entrepreneurial firm formation and growth. Broader Impacts: The results of analysis of the data set will be valuable to venture capitalists and entrepreneurs seeking to understand and improve the performance of new firms. For policy-makers understanding the firm development process this project will provide social scientifically-informed insight into interventions meant to encourage the establishment and improve the growth of such firms. Finally, we anticipate scholars will use this data in ways that cannot be foreseen as it becomes a research input to other projects.