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 R&R 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) (R&R at Journal of Accounting and Economics)
We examine whether and how mandatory financial statements are reflected in early-stage equity financing. Using population-wide Norwegian administrative data, we link standardized financial statement filings to equity transaction records 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 outcomes. Earnings improve system fit by roughly 5%, with comparable incremental contributions from cash flow from operations and, conditional on cash flow, accrual partitions. Accounting information is not crowded out by non-financial signals: prior financing history and credit ratings add substantial explanatory power, yet accounting variables retain incremental explanatory power conditional on a richer non-financial information set, pointing to complementarity rather than substitution. To examine the role of verification, we exploit a regulatory shift from mandatory to voluntary audit, holding production and dissemination fixed while making verification discretionary. Firms appear to sort around the audit-eligibility threshold, and voluntary audit choice becomes strongly associated with subsequent equity financing, even as accounting information retains explanatory power across verification regimes. The audit-associated financing premium is not driven by stronger investor reliance on audited numbers, nor does the evidence support signaling as the dominant mechanism; the pattern is most consistent with a monitoring and governance role of voluntary audit. Taken together, the results show that standardized accounting information is reflected in financing outcomes even in opaque early-stage settings and inform ongoing 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 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 imprecise at five-year horizon. Ultimately, the public funding portfolio mainly provides differentiated coverage across firm types and stages rather than a strong public-finance pipeline within the entrepreneurial ecosystem.
Family Equity Financing and Startup Innovation, with Brian K. Baik (Harvard Business School) and Johan Karlsen (Norwegian School of Economics)
Using Norwegian administrative data, we study how family equity financing relates to startup innovation. Family-financed firms invest less in R&D and receive fewer government innovation grants. Instrumental-variable estimates based on founder-family geographic distance are negative and statistically significant, suggestive of a causal relationship. Cross-sectional patterns point to a founder-side relational-cost channel rather than investor risk aversion. Family financing is also associated with reduced subsequent access to institutional capital. Our results suggest that early-stage investor identity shapes firms' innovation trajectories.
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.