What Makes Academic Ventures Successful? The Role of Academic Prominence and Early Employees

Prior research emphasized the role of academic founders’ human capital as a key factor informing the success of their ventures. Yet the mechanisms by which technically focused academic knowledge and expertise translate into venture success remain underspecified. Here we explore a hitherto unexplored mechanism: academically prominent founders can attract superior early employees who then contribute to venture performance. We probe this conjecture using matched employer-employee panel data for the full population of Danish academic ventures founded between 2008 and 2016. Our findings suggest that prominent academic founding teams attract employees that command higher salaries. In turn, ventures attracting higher paid employees achieve higher employment growth and greater success in attracting venture capital. We contribute to the literature on the antecedents of academic venture performance by going beyond considering the characteristics of the founding team and highlighting the role of early employees.