Cognitive proximity, business cycles, and the fate of VC-backed startups: evidence from a worldwide 34-year-long dataset

To estimate the influence of proximities on VC-backed startups' fate, we extracted data on startups and their VC investors over 34 years between 1980 and 2014. The data were extracted from Dow Jones’ VentureSource data platform. They cover VC deals in sixty-eight countries worldwide. We selected only startups financed by a VC round at least once in their lifetime. They belong to twenty-four industrial sectors (GICS 3-digit). We collected the available information on their financing rounds, investors and investment types, industry segments, and localization. For each startup in the dataset, we obtained information on VC funding rounds (“seed, 1st, 2nd, …, 9th, later, restart”) and on other sources of new funding, such as private equity investments and debt funding. Some of these funding rounds are exit events: acquisitions, mergers, IPOs or SPOs, and court liquidations. When VC investors liquidate their investments, and some new non-VC investors take over, the company is no longer VC-backed; thus, it is no longer tracked in the database. Consequently, the dataset exhibits a duration/survival structure: startups in the cross-sectional dimension but funding or exit event dates instead of calendar dates in the longitudinal dimension. The sample covers 51,969.