The impact of social media presence and board member composition on new venture success: Evidences from VC-backed U.S. startups

TL;DR

This study investigates how board composition and social media activity of board members influence the funding, sales, and efficiency of VC-backed U.S. startups, revealing nuanced effects of VC presence and social media engagement.

Contribution

It provides new insights into how board member social media activity and VC involvement impact startup funding and sales, using a unique dataset of 500 startups.

Findings

Startups with more VCs on board attract more funding.

Board members on Twitter increase funding but not sales.

Non-VC startups convert assets into sales more effectively.

Abstract

The purpose of this study is to examine the impact of board member composition and board members' social media presence on the performance of startups. Using multiple sources, we compile a unique dataset of about 500 US-based technology startups. We find that startups with more venture capitalists on the board and whose board members are active on Twitter attract additional funding over the years, though they do not generate additional sales. By contrast, startups which have no venture capitalists on the board and whose board members are not on Twitter show an increased ability to translate assets into sales. Consistent with other research, our results indicate that startups potentially benefit from working with VCs because of the opportunity to access additional funding, although their presence does not necessarily translate into sales growth and operational efficiency. We use a number of control variables, including board gender representation and board members' position in the interlocking directorates' network.