Multiple successful models: how demographic features of founding teams differ between regions and over time

Abstract

In this study, I ask: (1) is industry evolution or isomorphism theory a better model for understanding the change (lack-there-of) among founding team demographics over time? (2) Does region moderate which founding team demographics are prevalent and valued? To answer these questions, I analyse the demographic features of Boston and San Francisco Bay area biotechnology founding teams formed over a period of more than 30 years. I then examine whether there is a financial benefit – in terms of the value of their first investment – for having certain demographic features. I find that there are significant differences between Boston and San Francisco in (1) who becomes founders, (2) the rate at and ways in which demographic features evolve over time, and (3) the features of the founding teams that are rewarded by venture capitalists through higher initial investments. My results demonstrate the importance of treating region and industry age as moderators rather than controls.

Keywords::

• founding teams
• human capital
• demographic features
• status
• isomorphism
• industry evolution
• biotechnology industry
• venture capital

Acknowledgements

The author would like to thank Woody Powell and the members of the Strategic Organization and Networks Group, Mark Mortensen, two anonymous reviewers, and attendees of research seminars at HEC, Queen's University, Stanford University, University of Alberta, University of Victoria, and Wharton for comments on earlier versions of this paper.

Disclosure statement

No potential conflict of interest was reported by the author.

Additional information

Funding

This research was funded in part by the SSRC, Program on the Corporation as a Social Institution; and the Ewing Marion Kauffman Foundation Emerging Scholars Initiative.