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I develop and estimate a tractable equilibrium model of the venture capital (VC) market to study how financing frictions shape start-up outcomes, the sources of cross-country differences in VC activity, and the sectoral composition of VC investment. In the model, start-ups and VCs meet in a frictional matching market and write incomplete equity contracts that lead VCs to stage capital injections over time. Funding histories encode information about project characteristics and the funding environment, facilitating estimation. Using the estimated model, I find that removing financing frictions raises the share of high-growth start-ups that scale independently by 6pp (from 5% to 11%) and acquisitions by 14pp (from 25% to 39%). Extending the analysis across countries, I find that differences in VC activity reflect tighter financing and thinner acquisition markets, not start-up quality. UK start-ups face difficulties raising follow-on funding, which motivates focussing existing policy interventions on late-stage start-ups. Finally, I study how financing frictions bias VC funding away from long-horizon projects with fewer acquisition opportunities: in a frictionless benchmark, the share of VC-backed software and service start-ups would fall from 61% to 53%, offset by science-based sectors.

External Conferences & Presentations:

• 2024: Theories and Methods in Macro (T2M); 2024 RCEA International Conference in Economics, Econometrics, and Finance; EDGE Jamboree.

• 2025 (incl. scheduled): Columbia PE Research Conference; Eastern Finance Association Annual Meeting; Cambridge PE, VC & Innovation Conference; NYU Student Macro Lunch; FMA Europe; BSE Summer Forum. 

CERF Best Student Paper Award – 2024

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Discount rates are central to households’ investment, consumptions and savings choices, and are a key determinant of aggregate spending and growth. We develop an empirical menu approach to identifying individual’s discount rates. In making credit choices, consumers are often faced with decisions consisting of maturity and interest rate choices. We show that using the structure of consumers’ preferences, consumers’ maturity choices are informative about their discount rates as more patient consumers pick longer-maturities with more favorable rates. We estimate discount rates using a financial choice which trades-off smaller cashflows in the short term against larger cash flows in the future—the choice of bank time deposits and 182,540 term choices made by 46,746 account holders at a large Indian bank. We estimate an average discount rate of 11.6% and exhibit significant heterogeneity. Estimated discount rate predict savings and portfolio choices, as well as stock market participation. Discount rates rise during economic contractions, consistent with Keynesian theory. Individuals with higher discount rates invest more in equities following monetary policy loosening, suggesting that discount rate heterogeneity can play a role in monetary policy passthrough.

Do local stock markets matter for local outcomes? We develop a two-country model where firms make optimal entry and listing decisions, and informed investors, whose signal precision reflects both their proximity to markets and the proximity of firms to markets, make endogenous portfolio decisions. The interaction between firm decisions and investor behaviour determines the returns and information structure of each stock market in an Endogenous Noisy Rational Expectations equilibrium. Our main result establishes that local stock markets cease to exist when the domestic effective investor base, measured as the risk-adjusted size of local investors, is not sufficiently large. In addition, our model provides a theory of joint home bias, capturing the tendency of international listing decisions to reflect investor home bias.