"Direct Flights Between VCs and Their Companies Leads to Greater Innovation "

OD / finance 

"Direct Flights Between VCs and Their Companies Leads to Greater Innovation " 

The creation of new airline routes that reduce the travel time between VC firms and their portfolio companies leads to a 3.1% increase in the number of patents the portfolio company produces and a 5.8% increase in the number of citations the company’s patents receive, finds a study led by Shai Bernstein at Stanford. It also increases the probability of going public by 1.0% and the probability of having a successful exit (via IPO or acquisition) by 1.4%.

 From a survey, the researchers confirmed that venture capitalists are likely to spend more time at their portfolio companies -  if it becomes easier to get there. These results suggest that VCs don’t simply identify and invest in companies already poised to succeed; rather, when VCs spend more time with their portfolio companies, they contribute to their innovation and success.