Career Effects of Venture Capital on High-Technology Startup Employees

J. Daniel Kim, Management, The Wharton School; Elaine Pak, Management, The Wharton School

Abstract: Venture capital (VC) significantly contributes to job creation and innovation in high-tech startups, with around 50% of tech companies reaching IPOs in the past three decades having VC backing. While the benefits of VC on startups and regional economies are well-documented, its impact on individual career trajectories remains underexplored. This research proposal investigates how VC financing influences employee turnover and career progression within startups. VC investment can lead to higher wages and faster promotions, enhancing employee value. However, the reputational boost from VC affiliation could also increase employee visibility and attractiveness to other employers, potentially catalyzing turnover. The study aims to determine if VC financing heightens employee turnover, particularly towards other portfolio startups, and if departing employees are more likely to becoming entrepreneurs by securing financing from the same VC. We plan to study these questions by assembling and analyzing a large-scale database of venture-backed startups and employees.