Working Papers

Figure: Geographic Proportion of U.S. Green and Brown Startups

[Abstract]

This study examines the association between climate risk and green innovation within startup companies, with a specific focus on the role of venture capital (VC) investors in their consideration of climate risk when making investment decisions. By using the State Climate Adaptation Plans (SCAPs) as sources of exogenous variation to the perceived level of climate risk, I find that startups respond by intensifying their commitment to green innovation, while VC investors correspondingly increase their funding allocation to such environmentally focused startups. However, there is a significant heterogeneity observed among VC investors in terms of their valuation of climate risk within their investment decisions. Notably, experienced VCs do not exhibit a shift in demand towards green startups, a phenomenon that contributes to their long-term success in terms of achieving more favorable exits. Furthermore, the study finds that the SCAP adoption adversely affects brown startups in terms of attracting VC funding, while startups operating within the energy sector exhibit an increase in green innovation but fail to secure additional VC financing. These findings hold notable implications for green startups and for VC investors seeking to support green innovation in the face of evolving environmental policies.

Presentations: 13th FMCG Annual Meeting (2023), Swedish House of Finance & Berkeley Haas Conference on Climate Finance (2023),  ASAC (Best Student Paper Award, 2023), 7th Shanghai-Edinburgh-London Green Finance Conference (2023), 32nd EFMA (2023), 98th IBEFA & WEAI (2023), IRMC (2023), WFC (2023), 34th ABF&E/AEF Annual Meeting (2023), SWFA (Best Paper Award in Investments, 2024), EFA (2024), California State University - Fresno (2024), FMA (2024), 

Figure: Depiction of Fraudulent Transfer

SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4291636

[Abstract]

This study analyzes the effects of the Uniform Fraudulent Transfer Act (UFTA) on venture capital (VC) investment strategies and startup performance. Examining data for 34,578 unique venture-capital-backed startups from 1977 through 2019, we find that the UFTA inadvertently induces VC investors to adjust their investment strategies, prioritizing existing portfolio companies. Consequently, owing to a scarcity of new market entrants and subsequent to the implementation of the UFTA, VC investors allocate more funding to startups over longer durations, thereby leading these startups to rely more heavily on secured debt and to experience diminished innovation outcomes. Additionally, under heightened financial pressure, startups commit violations more frequently, particularly employment-related offenses. Nevertheless, notwithstanding the negative externalities associated with the UFTA, startups financed by experienced venture capitalists improve their innovation performance, ultimately facilitating their successful exits through initial public offerings. 

Presentations: ASAC (Best Student Paper Award, 2022), 33rd ABF&E/AEF Annual Meeting (Finalist for the Robert A. Olsen Best Doctoral Student Paper Award, 2022), 7th VSBF (2022), 1st ISAFE Annual Meeting (2022), 3rd Boca Raton Corporate Governance Conference (2022), WFBS (2022), SWFA (2023)

Figure: Enactment Map for the UTSA from Uniform Law Commission

SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3940610 

[Abstract]

This article examines the mechanisms used by venture capitalists (VCs) to monitor their investments in startups that use trade secrets to protect their intellectual property (IP). First, we confirm that, after startups are afforded stronger trade secrets protection by the adoption of the Uniform Trade Secrets Act (UTSA), they reduce their reliance on patents. Next, we investigate how VCs respond, finding that they decrease both the duration of financing rounds and the overall amount invested per round, especially for startups located the furthest distance away. Finally, we consider how these collective changes affect the exiting process, finding that the likelihood of a successful exit through either an initial public offering (IPO) or merger or acquisition (M&A) is unchanged, but that, within successful M&A exits, the likelihood that the acquirer is private increases. Overall, our findings suggest that VCs work harder to monitor startups that use trade secrets and that this increased effort is necessary to maintain similar likelihoods of successful exiting. 

Presentations: University of Oklahoma (2021), 2nd Boca Raton Corporate Finance Governance Conference (2021), University of Cambridge (2022), Florida State University (2022), Oklahoma State University (2022), 12th FMCG Annual Meeting (2022), University of Tennessee (2022)

Work in Progress