Does Early Incubating Improve the Performance of Start-ups?: Evidence from TIPS in Korea
Recently, the government has been pursuing various policies to create new industries and jobs through the invigoration of start-ups. For the sustained growth of start-ups, it is necessary to look not only at the supply of risk capital but also at policies for venture capital firms that nurture and f...
| Main Author: | |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Korea Development Institute
2018-05-01
|
| Series: | KDI Journal of Economic Policy |
| Subjects: | |
| Online Access: | https://doi.org/10.23895/kdijep.2018.40.2.75 |
| Summary: | Recently, the government has been pursuing various policies to create new industries and jobs through the invigoration of start-ups. For the sustained growth of start-ups, it is necessary to look not only at the supply of risk capital but also at policies for venture capital firms that nurture and foster start-ups. The purpose of this study is to estimate the effects of the nurturing and fostering role of risk capital, such as mentorship on the performance of start-ups, and to do this we analyzed the effects, as a newly introduced form of venture capital, of mentoring by an accelerator and investor ties on the performance outcomes of start-ups. We find that mentoring and investor ties for start-up enterprises positively influence follow-up investment in start-ups. In addition, this study finds that with a younger CEO of a start-up, it is more likely that the performance of the start-up will improve. Meanwhile, when examining increases in employment as a measure of the business performance of start-ups, mentoring and investor ties are found to have a positive effect on the increase of employment at start-ups. These results suggest that there is a need to promote policies that strengthen the mentoring role of venture capital in Korea's equity finance policies and in the government's SME support policies. |
|---|---|
| ISSN: | 2586-2995 2586-4130 |