Evaluating Selection Bias in Early-Stage Investment Returns, with Aksel Mjos (Norwegian School of Economics) and David T. Robinson (Duke University and NBER) (Journal of Financial and Quantitative Analysis. 2026; 61(2): 841-871 .)
This paper investigates sample selection bias in early-stage investment. We use comprehensive administrative data on the universe of new firm starts in Norway, allowing us to compare venture-backed firms with ex ante similar firms that do not receive venture funding. The valuation premium for venture backing is sizeable at firm birth and doubles over the first five years, implying a substantial upward bias in VC returns relative to comparable firms. In contrast, the premium for firms receiving multiple rounds of outside equity emerges only after the first year and remains significantly smaller than the VC premium throughout the firm lifecycle..
Are Some Angels Better than Others?, with Johan Karlsen (Norwegian School of Economics), Aksel Mjos (Norwegian School of Economics) and David T. Robinson (Duke University and NBER) (2nd Round Revise & Resubmit at Journal of Finance)
This paper provides novel, large-scale evidence on the returns to angel investing. Returns are extremely right-skewed: most lose money, the top one percent return more than fifty times invested capital, and the mean investment doubles invested capital. Investor-specific variation is an important part of overall variation in returns. Wealthier investors sort into better firms yet earn lower returns compared to other investors in those firms. Better performing angels have more startup-specific and industry knowledge, founder connections, and engage in active governance. These findings have implications for policies aimed at expanding early-stage finance.
Accounting Information in Early-Stage Financing, with Aksel Mjos (Norwegian School of Economics) and David T. Robinson (Duke University and NBER) (Reject & Resubmit at Journal of Accounting and Economics)
We examine whether and how mandatory financial statements are reflected in early-stage equity financing. Using Norwegian administrative data, we link standardized financial statements to equity transactions and estimate a three-equation system that jointly models selection into financing, capital allocation, and valuation, while accounting for selection into observed rounds and correlated shocks across these outcomes. Earnings improve system fit by roughly 16%, with most incremental explanatory power concentrated in cashflow from operations and only marginal gains from accrual partitions. Exploiting the regulatory shift from mandatory to voluntary audit, we show that audit status becomes informative about latent capital demand, but, conditional on verification type, the mapping from accounting partitions to financing outcomes remains similar. Accruals become only modestly more decision-relevant under audit, suggesting that investors do not place greater weight on the same reported numbers if they are verified. The results highlight that standardized accounting information remains decision-relevant even in opaque early-stage settings and inform debates over the content and assurance of mandated private-firm reporting.
Entrepreneurial Public Funding Choices
Governments deploy grants, loans, and public venture capital, yet empirical evidence rarely evaluates them as an interacting system. Using Norwegian population-level administrative records that track approved and rejected applicants, together with survey evidence, this paper shows sharp sorting across public funding instruments at entry and further segmentation through instrument-specific screening. Application behavior shifts dynamically around approval and rejection decisions. The resulting sequences form a ladder, with broad-access grants as the on-ramp. However, an instrumental-variable design exploiting residualized region–year variation in grant approval rates shows that the apparent grant gateway largely reflects selection and learning: marginal grant approvals do not meaningfully increase subsequent participation in equity programs, while a delayed gateway into loans, which is administered by the same allocator, is economically large but imprecisely estimated at five-year horizon. Ultimately, public funding programs operate primarily through targeting complementarity---supporting different types and stages of firms---rather than gateway complementarity within the entrepreneurial ecosystem.
Family Financing in Startups, with Brian K. Baik (Harvard Business School) and Johan Karlsen (Norwegian School of Economics)
Using Norwegian administrative data, we identify family investments in startups and examine their effects on investor returns and firm behavior. Family investors earn lower returns than outside angel investors, and the firms they back are less likely to secure professional financing or achieve a successful exit. These firms also pursue more conservative strategies resulting in lower innovation- and operation-related outcomes. Instrumental variable (IV) estimates that exploit geographic distance between founders and relatives at firm incorporation indicate that most cross‑sectional differences largely reflect selection rather than causal influence. Placebo and difference‑in‑differences tests, alternative instruments, and subsample checks support the exclusion restriction and yield consistent conclusions. Additional tests suggest that family investors’ protective altruism toward founders is the driving mechanism behind this selection: conservatism is strongest when family members co‑reside with the founder and persists among wealthy and experienced family investors. We document family investors as a behaviorally distinct source of startup capital.
Fundamentals of Entrepreneurial Accounting
Established Public Firms Creating Newly Public Firms with Merih Sevilir (IWH Halle and ESMT Berlin)
What Information do Startups Provide to Their Venture Capital Investors? with Malte Lorenz, ESMT Knowledge 2017.
Identifikation nahe stehender Personen im Rahmen der gesetzlichen Abschlussprüfung (Identification of related parties within the statutory annual audit), with Klaus Ruhnke (Freie Universität Berlin), Die Wirtschaftsprüfung (65), 1079-1088.