Research

Securing Venture Capital for Sustainability-Driven Ventures:

An Analysis of Funding Delay [JOB MARKET PAPER]

(with Andrea Fosfuri, and Nicola Misani)

[Revise & Resubmit]

This study explores the funding delays faced by Sustainability-Driven (SD) ventures when seeking investment from Venture Capitalists (VCs). SD ventures have a dual mission, targeting both economic returns and non-economic sustainability-oriented goals. We argue that this dual mission complicates VCs’ evaluation of these ventures’ and sets the stage for possible agency conflicts. Therefore, VCs might postpone investment in SD ventures to reduce uncertainty and mitigate these conflicts. Utilizing the global PitchBook dataset for empirical analysis, we find evidence that SD ventures experience a longer time in obtaining Venture Capital (VC) funding. Nevertheless, our research identifies specific factors that can lessen these delays. Our results provide insights for SD ventures aiming to expedite VC funding during crucial early stages of their development.

Big Techs, Small Techs, and the Dynamics of Technology Life Cycle:

The Case of Artificial Intelligence

(with Claudio Panico, and Carmelo Cennamo)

[Under Review]

We examine the complex interplay between mergers and acquisitions (M&As) and corporate venture capital investments (CVCs) by large incumbents in relation to startup activities and venture capital (VC) investments. Focusing on the Artificial Intelligence (AI) technological evolution, we analyze a sample of 39,508 startups to develop nuanced insights into the understudied effects of Big Techs’ strategic investment behaviors. Our research provides evidence that: The impact of CVCs and M&As varies across different stages of AI technological development; large incumbents demonstrate heterogeneous approaches to CVCs and M&As; these strategic activities have differential effects on the innovation ecosystem. Furthermore, we contribute to the ongoing scholarly debate regarding whether large incumbents’ activities create a “kill zone” or foster an “innovation zone,” with particular emphasis on the role of CVC investments alongside M&As and the contextual dynamics of technological evolution.

The Power of Quit:

Limited Partners' Influence on Sustainability Across Venture Capital Funds

(with Qiang Xiong, Andrea Fosfuri, and Nicola Misani)

[Under Review]

Sustainability-driven (SD) ventures often rely on venture capital (VC) to scale effectively. While existing research focuses on factors driving VC-venture interaction, this study shifts the analysis upstream in the equity financing value chain. We examine how investments in SD ventures are shaped by VC funds’ original capital providers, i.e., limited partners (LPs). Analyzing 4,864 funds, we find that LPs with dual objectives (financial and non-financial) significantly influence the inclusion of SD ventures, despite limited formal control. By highlighting LPs’ role, we offer novel insights into drivers of sustainable financing and implications for ventures seeking to expand funding opportunities.

Balancing Control and Engagement through IP Strategies:

The Case of Open-Source Software-Based Startups

(with Xi Wu, Claudio Panico, and Andrea Fosfuri)

Open-source software (OSS) community is increasingly recognized as a transformative force in society. It enables resource-constrained profit-oriented startups access to valuable collaborative resources. While the OSS community offers significant advantages, OSS-based startups must strategically manage challenges regarding intellectual property (IP), to achieve commercial success. This study examines the impact of IP strategies on startup performance, focusing on two critical decisions startups need to make: introducing Contributor License Agreements (CLA) requirement and selecting the initial type of user-end Open-Source License (OSL). Specifically, from a strategic human resource management perspective, it explores whether requiring CLA signatures affects contributor participation and how the initial choice of OSL type moderates this impact. Preliminary findings reveal that introducing a CLA requirement enhances contributor participation, as evidenced by increases in both the number of contributors and contributions per quarter. However, the adoption of a restrictive OSL type mitigates this positive effect. This research highlights the importance of effective IP management for OSS-based startups within the OSS community.

Beyond Competition: A Complementarity Perspective on Platform Acquisitions

(with D. Daniel Sokol, and Carmelo Cennamo)

As digital platforms scale, they need to decide whether to develop new capabilities internally (“make”) or acquire external firms (“buy”) to accelerate growth. Although platform mergers and acquisitions (M&A) are often scrutinized for their potential to stifle competition, M&A are commonly used for platform development, strengthening complementary assets, network effects, technological capabilities, data synergies, or human capital expertise. This study develops a structured “make vs. buy” framework to assess when and how platforms can leverage M&A to enhance ecosystem development. Applying this framework, we analyze several platform M&A cases across different strategic intents and regulatory outcomes, including growth-driven M&As with lower regulatory risk, such as Amazon-Whole Foods (strategic asset acquisition), Google-Polar (human capital acqui-hire), Google-Fitbit (data complementarity). We contrast these with competition-reducing takeovers with high regulatory risk, such as Bazaarvoice-PowerReviews and NVIDIA-Arm. Our findings provide theoretical and managerial insights into how platforms should structure M&A with low regulatory risks to drive long-term value.

First-Mover vs. Second-Mover Advantage:

How Developers Respond to Sequential Policy Changes Across Competing Platforms

(with Xi Wu)

Digital platforms compete not only for users but also for developers, whose participation drives innovation and user engagement. This study examines how developers respond to sequential policy changes introduced by competing platforms, using Apple and Google’s staggered commission fee reductions in 2021 as a natural experiment. Employing a two-stage Difference-in-Differences (DID) model, we analyze how multi-homing developers adjusted their engagement. We find that first-mover advantages exist. Apple’s early policy spurred a significant rise in developer activities, and such effect remains over time. Google’s later, nearly identical policy only rebalanced developer engagement to a certain degree. Multi-homers reallocate resources instead of expanded effort, indicating substitution over synergy across different platforms. Our results show that sequential incentives can impact developer dynamics differently, highlighting the strategic role of timing in digital platform competition.

Starstruck! The Role of Celebrity Investors in Start-Up Fundraising

(with Patrick Smith, and Mario Daniele Amore)

Over the past ten years, the venture capital industry has seen a significant rise in celebrity investors, with the number of celebrity-backed investments increasing from 34 deals in 2014 to 387 deals in 2021. Contrary to investment signals sent by traditional high-status investors such as venture capital firms and established corporations which are high in both prominence and proven quality, signals sent by celebrity investors are extremely high in prominence but exceptionally low in relevant or proven quality. This research investigates how external audiences interpret and respond to celebrity investor signals, and the impact that has on start-up financing. Leveraging literature on signaling theory, we argue that the source credibility, trustworthiness, and attractiveness associated with a celebrity investor will positively influence external investor sentiment towards the focal firm, thereby garnering a premium for the celebrity-backed firm. By combining start-up investor data with celebrity Q-Rating data over a 20-year period, our findings reveal that firms tend to raise larger sums of capital and raise capital more quickly in the subsequent financing round following a celebrity’s investment. However, we also observe that these subsequent deals are financed by larger investment syndicates whose members have less deal making experience. As a result, we find that while the additional capital increases the survival rate of celebrity-backed startups, celebrity investors have no impact on positive exits such as IPOs or Acquisitions.

Publications:

Yangyang Cheng, D. Danie Sokol, and Carmelolo Cennamo (forthcoming). “Rethinking the Traditional M&A Motivations within the Platform Acquisitions Context”. In Handbook on Digital Platforms (Cambridge University Press). [download]

Zhihui Li, Yuanyuan Jiao, Yangyang Cheng, Zhifen Shen, and Mi Zhou (2025). “Unlocking the Power of Peer Influence: Strategies for Bridging the Adoption Chasm in New Product Diffusion”, Managerial and Decision Economics, 46(1), 361-377. [download]

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