Abstract
Venture capitalists (VCs) play a crucial role in boosting the survival and growth of AI
start-ups. Therefore, understanding the fit between VCs and AI start-ups is an essential question.
This paper quantifies the technology path-dependency of venture capitalists in the context of
investing in AI start-ups, which is an under-explored area. Specifically, this paper investigates the
effects of technological proximity to VC on the performance of AI start-ups using VentureXpert
data. We construct technological proximity between AI companies and VCs by applying text
mining methods to the technology keywords embedded in company descriptions. The results
suggest that VCs are more likely to invest in technologically proximate AI start-ups than
technologically distant IT start-ups. More interestingly, technological proximity is positively
associated with the number of rounds the VC invested in the company and the successful exit of
AI start-ups. This study has important practical implications for AI entrepreneurs and venture
capitalists.
start-ups. Therefore, understanding the fit between VCs and AI start-ups is an essential question.
This paper quantifies the technology path-dependency of venture capitalists in the context of
investing in AI start-ups, which is an under-explored area. Specifically, this paper investigates the
effects of technological proximity to VC on the performance of AI start-ups using VentureXpert
data. We construct technological proximity between AI companies and VCs by applying text
mining methods to the technology keywords embedded in company descriptions. The results
suggest that VCs are more likely to invest in technologically proximate AI start-ups than
technologically distant IT start-ups. More interestingly, technological proximity is positively
associated with the number of rounds the VC invested in the company and the successful exit of
AI start-ups. This study has important practical implications for AI entrepreneurs and venture
capitalists.
| Original language | English |
|---|---|
| Number of pages | 11 |
| Publication status | Presented - 15 Dec 2022 |
| Event | The 32nd WORKSHOP ON INFORMATION TECHNOLOGIES AND SYSTEMS - Copenhagen, Denmark, Copenhagen, Denmark Duration: 14 Dec 2022 → 16 Dec 2022 https://witsconf.org/wits2022-call-for-papers/ |
Conference
| Conference | The 32nd WORKSHOP ON INFORMATION TECHNOLOGIES AND SYSTEMS |
|---|---|
| Abbreviated title | WITS |
| Place | Denmark |
| City | Copenhagen |
| Period | 14/12/22 → 16/12/22 |
| Internet address |
Bibliographical note
Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s)Research Keywords
- Artificial intelligence
- technological proximity
- venture capitalist
- IT entrepreneurship