The Relationship Between Entrepreneurs’ Founding Experience, Investing Angels and Start-ups’ Technological Output

Abstract

In existing literature on the effect of entrepreneurial experience on firm performance, the nature of the relationship between the founding experience of entrepreneurs and the technological output of start-ups remains unclear: Is technological performance directly influenced by entrepreneurs’ founding experiences, or does this experience facilitate something else that drives technological performance? A comprehensive database of the Israeli high-tech industry, frequently used by official institutions, along with USPTO patent data, is used. The analysis covers 5,238 young start-ups across seven technology industries, led by 9,881 entrepreneurs, 2,237 of whom have prior founding experience. These start-ups were associated with 1,898 patents and 21,357 citations to these patents, and 3,553 angels invested in some of these start-ups. The results indicate a sequence where angels mediate the relationship between experienced entrepreneurs and technological output. The research highlights the role of founding experience in signalling angels and the direct link between angels and patenting activity.