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Technifying Ventures

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Abstract

How do advanced technology adoption and venture capital (VC) funding impact employment and growth? An analysis of data from the US Census Bureau shows that while both advanced technology use and VC funding are important on their own for firm outcomes, their combination has the strongest effect. VC tends to have a bigger impact, but it affects only a small number of firms, while technology adoption has a smaller impact but affects many more firms. A model of startups is created, focusing on decisions to use technology and seek VC funding. The model is compared with firm-level data on employment, technology use, and VC investment. The study also looks at the effects of business taxes and subsidies, and measures the overall importance of technology and VC in the economy.

Suggested Citation

  • Yoshiki Ando & Emin Dinlersoz & Jeremy Greenwood & Ruben Piazzesi, 2025. "Technifying Ventures," Economie d'Avant Garde Research Reports 40, Economie d'Avant Garde.
    • Handle: RePEc:eag:rereps:40
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    Keywords

    Advanced technology; banks; capital gains taxation; corporate income taxation; difference-in-difference analysis; employment; firm-level data; reallocation effect; startups; subsidies; synergy; venture capital; technology adoption; US Census data;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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