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Investor Commitment to Serial Entrepreneurs: A Multilayer Network Analysis

Wed November 4th 2015, 12:30pm
Event Sponsor
Stanford Institute for Research in the Social Sciences & Stanford Sociology Department
SCANCOR Conference Room (CERAS 123)
Investor Commitment to Serial Entrepreneurs: A Multilayer Network Analysis

Lunch will be provided.


Investors acknowledge the critical role of the entrepreneur in the decision to invest. Nevertheless, research has focused on investor commitment to the startup organization to the neglect of the individual entrepreneur. When an entrepreneur leaves a startup for a new company, it is unknown whether investors remain committed to that entrepreneur. Part of the challenge in studying investor commitment to serial entrepreneurs is that investment and entrepreneurship are two distinct social interactions involving different types of actors and contexts. Multilayer network analysis addresses this problem by merging the investment and entrepreneurship networks via connecting nodes or edges. Through multilayer network analysis, we can evaluate how the dynamics of an entrepreneurship network impact the dynamics of the investment network. Our study explores the possibility that investors invest in entrepreneurs regardless of startup. We use a dynamic, multilevel network dataset of startup investment and entrepreneurial employment to determine whether investors become committed to individual entrepreneurs. We hypothesize that when an entrepreneur Ej leaves one company for another, investor Ii of the prior company will subsequently invest in the entrepreneur’s new company. We use an innovative multilayer network analysis technique to identify investor commitment to the entrepreneur. We first structure the investment and entrepreneurship networks as two bipartite trees that capture the aggregate history of investors investing in a set of companies and entrepreneurs working for the same set of companies. We then analyze the similarity of the two bipartite graphs with temporal weighting to establish temporal precedence of entrepreneurial employment to investment. We apply a novel measure of graph intersection that permits more accurate symmetry comparison than traditional Jaccard coefficients. Specifically, we define a ratio of IiEj intersections out of all investments made by investor Ii or all employment of entrepreneur Ej. From this ratio, we are able to identify the proportion of investors or entrepreneurs in our dataset for whom commitment is present. We find that, of entrepreneurs that have received a second investment from the same investor, 99.8% have received further investment from the same investor. Moreover, 326 entrepreneurs in our dataset have received investment from the same investor each time they migrated to a new company. These findings support the hypothesis that investors commit to serial entrepreneurs regardless of the startup organization.


Jessica Santana is a doctoral candidate in the Department of Sociology at Stanford University. Her research evaluates the role of networks in innovation. This work is driven by insights from organizational theory, social psychology, network science, and economic sociology. She relies on a variety of methodological approaches, including experimental, statistical, and computational analyses.