Waiting for the Payday? The Market for Startups and the Timing of Entrepreneurial Exit

• 成果类型: Article
• 署名作者: Arora, Ashish; Fosfuri, Andrea; Ronde, Thomas
• 署名单位: Duke University; National Bureau of Economic Research; Bocconi University; Bocconi University; Copenhagen Business School; Centre for Economic Policy Research - UK
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3627
• 发表日期: 2021
• 关键词: Entrepreneurship; research and development; INNOVATION; Industrial Organization; market structure; Firm strategy; market performance

摘要

Most technology startups are set up for exit through acquisition by large corporations. In choosing when to sell, startups face a trade-off. Early acquisition reduces execution errors, but later acquisition both improves the likelihood of finding a better match and benefits from increased buyer competition. Startups' exit strategies vary considerably: Some startups aim to sell early; others remain in stealth mode by developing the invention for a late sale. We develop an analytical model to study the timing of the exit strategy. We find that startups with more capable founding teams commit to a late exit, whereas those with less capable founding teams commit to an early exit. Finally, startups with founding teams of intermediate capabilities remain flexible: They seek early offers but eventually sell late. If trying the early market is so costly that startups have to make a mutually exclusive choice between an early and late sale, startups sell inefficiently late. Instead, if they can collect early offers at no cost before deciding on the timing of sale, there are too many early acquisitions.