Working Paper - The Unintended Entrepreneurial Returns to University Grants
Evidence from Germany shows that university-wide grants increase the venture capital raised by graduates’ start-ups, with gains emerging only after seven years. A Working Paper by Daniel Gros, Giorgio Presidente, and Thomas Schwab
Executive Summary
This paper asks whether university-wide public investments build entrepreneurial capacity.
We link venture-capital (VC) deals to founders’ education histories and track the financing raised by startups founded by graduates of universities competing for highly selective, multi-year institutional grants.
We identify the grants’ causal effects using the program’s two-stage selection process: funded universities are compared with institutions also judged ex ante to be credible candidates for funding, and whose proposals advanced through the first stage but were not selected in the final round.
We document three main findings. First, winning a university-wide grant substantially increases the VC financing raised by alumni-founded startups, but the effect emerges only seven years after the award.
Second, the delayed response and its concentration among cohorts exposed while studying at funded universities are inconsistent with an immediate prestige or labeling effect and instead point to the gradual accumulation of entrepreneurial capacity.
Third, university-wide grants generate larger effects on venture-backed entrepreneurship than project-based research funding. The results are stable across alternative estimators, comparison groups, and timing definitions.
IEP Bocconi does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
