Entrepreneur Experience and Success: Causal Evidence from Immigration Wait Lines
Abstract
This paper investigates the causal impact of entrepreneurs’ prior experience on startup success. Employing within-country changes in Green Card wait lines to instrument for immigrant first-time entrepreneurs’ experience, we uncover that startups led by more experienced founders demonstrate superior funding, patenting, and employee growth. Specifically, each additional year of founder experience leads to a 0.6 p.p. (1 p.p.) increase in the likelihood of a startup undergoing an IPO (growing to over 1000 employees), over the subsequent decade. The larger initial team size, facilitated by the improved ability to recruit former colleagues, explains the observed startup success. Our findings imply that each extra year of experience is worth $170,000, underscoring a critical consideration for policymakers in the design of startup incubators.
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https://kenaninstitute.unc.edu/publication/entrepreneur-experience-and-success-causal-evidence-from-immigration-wait-lines/
