This article studies how early-stage entrepreneurs respond to negative feedback about the quality of their ventures. We use data from new venture competitions, some of which privately inform founders of their relative rank. The empirical strategy compares lower and higher ranked losers across competitions in which they did and did not observe their standing. Receiving negative feedback increases average venture abandonment by 13%. Differences in responsiveness—for example, in venture risk, venture maturity, and signal precision—are consistent with particular theories about entrepreneurship, including the importance of experimentation.

This paper explores how the cost of risk management varies with firm characteristics, offering the first comparison between private, public, and family-owned firms. It exploits a natural experiment in highway procurement, which features diverse firms with common exposure to commodity risk. The Kansas government began to insure highway paving firms against oil price risk in 2006. The analysis compares Kansas to Iowa, which has an otherwise similar highway procurement system but never introduced such a policy. Using data from 1998 to 2012, I show that the policy reduced average bid sensitivity to oil price volatility. Private firms with high credit risk and low industry diversification exhibit the most risk pass-through, while public firms exhibit no pass-through. Family-owned firms do not have a higher than average cost of risk. Financial constraints and distress costs appear to best explain the cost of risk management, rather than risk aversion, information, or agency problems.

Venture capital, an important source of financing for potentially high-growth new businesses, is believed to suffer from information frictions. This paper quantifies the magnitude of these frictions among participants in new venture competitions. In a regression discontinuity design with data from 87 competitions, winning a round increases the chances of external financing by about 35%. Winning is most impactful for ventures that are ranked just above the cutoff but receive no cash prize, and judge ranks strongly predict venture success. The results indicate that these information problems in new venture finance are large, and competitions can help resolve them through certification.

Governments regularly subsidize new ventures to spur innovation. This paper conducts the first large-sample, quasi-experimental evaluation of R&D subsidies. I use data on ranked applicants to the US Department of Energy's SBIR grant program. An early-stage award approximately doubles the probability that a firm receives subsequent venture capital and has large, positive impacts on patenting and revenue. These effects are stronger for more financially constrained firms. Certification, where the award contains information about firm quality, likely does not explain the grant effect. Instead, the grants are useful because they fund technology prototyping.

This paper offers the first study of how changes in corporate R&D investment affect labor mobility. We show that increases in R&D spur employee departures to join start-ups’ founding teams. This appears to reflect employees taking the ideas, skills, or technologies created through the R&D process but not especially valuable to the R&D-investing firm to start-ups. The employee-founded start-ups tend to be outside the R&D-investing employer’s industry, suggesting that the underlying ideas would impose diversification costs on the R&D-investing firm. The start-ups are more likely to be VC backed, high tech, and high wage, pointing to substantial spillover benefits.

We find that male participants in Harvard Business School’s New Venture Competition who were randomly exposed to more venture capital (VC) investors on their panel were substantially more likely to start a VC-backed startup post-graduation, indicating that access to investors impacts fundraising independent of the quality of ideas. However, female participants experience no benefit from exposure to male or female venture capitalists (VCs), which appears related to a reduced propensity to reach out to VCs to whom they were exposed. Our results therefore also demonstrate gender-based differences in the degree to which increased exposure to investors can address networking frictions in venture capital.

This paper examines how employee earnings respond to a one-time cash flow shock in the form of a government R&D grant. In a regression discontinuity design, we find that the grant immediately increases average annual employee-level earnings by 2.9%. This benefit accrues only to incumbent employees and rises with job tenure. The grant also affects firm growth, but the initial wage patterns do not appear to reflect growth or productivity. Instead, the evidence supports implicit equity financing within the firm, where employees initially accept lower wages from financially constrained firms and earn more when the firm has ability to pay.

Initial coin offerings (ICOs) have emerged as a new mechanism for entrepreneurial finance, with parallels to initial public offerings, venture capital, and presale crowdfunding. In a sample of more than 1,500 ICOs that collectively raise $12.9 billion, we examine which issuer and ICO characteristics predict successful real outcomes (increasing issuer employment and avoiding enterprise failure). Success is associated with disclosure, credible commitment to the project, and quality signals. An instrumental variables analysis finds that ICO token exchange listing causes higher future employment, indicating that access to token liquidity has important real consequences for the enterprise.

For governments procuring innovation, one choice is whether to specify desired products (a "Conventional" approach) or allow firms to suggest ideas (an "Open" approach). Using a U.S. Air Force R&D grant program, where Open and Conventional competitions were held simultaneously, we find that Open awards increase both commercial innovation and technology adoption by the military. In contrast, Conventional awards have no positive technology effects, but do create more program lock-in. The Open program attracts new types of applicants (e.g. start-ups), but openness also has a differential impact beyond inducing selection. These results suggest benefits from open approaches to innovation procurement.

When race is not directly observed, regulators and analysts commonly predict it using algorithms based on last name and address. In small business lending—where regulators assess fair lending law compliance using the Bayesian Improved Surname Geocoding (BISG) algorithm—we document large prediction errors among Black Americans. The errors bias measured racial disparities in loan approval rates downward by 43%, with greater bias for traditional vs. fintech lenders. Regulation using self-identified race would increase lending to Black borrowers, but also shift lending toward affluent areas because errors correlate with socioeconomics. Overall, using race proxies in policymaking and research presents challenges.