The Determinants of Upward Mobility in the Venture Capital Investment Ladder

Abstract

This paper addresses two questions: what specific characteristics of investors and deals are more influential on the upward progression of Latin American startups in the venture investment ladder, and whether this progression is catalyzed by previous funding from specific institutional actors (such as global VC investors or public startup programs). Combining data from Pitchbook, Crunchbase, LinkedIn, and major Latin American national startup programs, and implementing staggered difference-in-differences methods, the paper finds that investor traits affect future participation and progression in the investment ladder. The two strongest predictors of progression are the type of investor (VC funds being the most influential) and the base of operations (US and internationally based investors being the most influential). Public programs also increase the odds of leveraging future private investments, but not in advanced post-seed rounds.