Working Papers

1. How Does Active Involvement Benefit Investors? Evidence From 85 Billion Cellphone Signals

Awards:
- The Brattle Group PhD Candidate Awards for Outstanding Research at WFA (2024)
- The J. Spencer Martin Award for Best Doctoral Student Paper at the ASU Sonoran Winter Finance Conference (2024)
- The Irwin Friend Prize for Best Third-Year PhD Paper at the Wharton School (2023)

Presented at:
- AFA (2025, scheduled), FRA (2024, scheduled), WFA (2024), ASU Sonoran Winter Finance Conference (2024), MFA (2024), WEFI PhD workshop (2023), Wharton-INSEAD Doctoral Consortium (2023)

Abstract:
- I investigate the reputation effect of active involvement, specifically examining how venture capitalists’ (VCs’) on-site meetings with portfolio companies affect VCs’ reputations and future deal flow. By analyzing 85 billion cell phone signals collected around VC and startup office buildings from 2018 to 2023, I quantify VCs’ involvement intensity and deal flow quality. Using exogenous variation in travel ease, I show that increased VC involvement leads to better online reviews from entrepreneurs, attracting more and higher-quality new entrepreneurs to pitch, ultimately improving future investment outcomes. Furthermore, I document six stylized facts about VC involvement: (1) VCs visit underperforming portfolio companies more frequently; (2) the frequency of visits increases when portfolio companies are closer; (3) early-stage investments receive more frequent visits; (4) VCs and nontraditional investors (CVCs, PEs, hedge funds) visit at similar frequency, while accelerators and incubators visit more often; (5) deals with more co-investors involve more overall visits, but each investor visits less frequently; (6) larger VCs visit less frequently per deal.

Presented at:
- MFA (2023), The Mack Institute Seminar (2023), Greater China Area Finance Conference (2022), Wharton-INSEAD Doctoral Consortium (2022), Peking University Finance Conference (2022)

Abstract:
- This paper provides causal evidence on the impact of patenting choices on patent outcomes. Using a novel database of Inter Partes Review (IPR) lawsuit cases and leveraging the random assignment of judges, I show that firms can obtain 60% more patents simply by changing their patenting motives, without changing their underlying innovation ability. Furthermore, this paper explores the real effects of patenting choices on R&D and investment decisions, and proposes alternative measures to better capture innovation ability for future research.

Abstract:
- How do investors choose the intensity of their due diligence, and how does it matter for investment outcomes? Using cellphone signal data, we measure the duration of pre-investment meetings between VCs and startup employees, and we use this measure as a proxy for VC due diligence. Less due diligence is associated with hotter markets, busier investors, and greater distance, consistent with a theory of optimal learning subject to costs and competition. Also consistent with that theory, less due diligence is associated with more volatile investment performance, as VCs allocate capital under greater uncertainty. Overall, VCs appear to trade off the costs of due diligence with its improvements to capital allocation.

Figure 1: This figure uses a novel dataset to illustrate the relationship between VC choice set quality and investment outcomes, motivating the research question in this paper. Each point represents a VC firm. The x-axis measures the quality of the VC’s choice set, defined as the number of future unicorns (startups that were not unicorns at the time of pitching but eventually reached a $1 billion valuation) pitched to the VC, divided by the total number of startups pitched. This serves as a proxy for the average quality of entrepreneurs pitching to the VC. The y-axis reflects the VC’s investment outcome, calculated as the number of future unicorns in the VC’s portfolio (startups that were not unicorns at the time of investment but eventually became unicorns), divided by the total number of its investments. The sample period spans from January 2018 to January 2023. The list of startups pitching to a VC is constructed using cell phone signals, which detect when an entrepreneur’s signal is within 200 meters of the VC’s office for over 30 minutes. A point above the 45-degree line indicates that the unicorn rate of final investments exceeds the unicorn rate of pitched startups, suggesting the VC has selection ability. In the paper, we aim to use structural estimation to quantify how much of a VC’s success can be attributed to selection ability, nurturing ability, or access to higher-quality deal flow.

Figure 1: This figure uses proprietary data to illustrate the relationship between technological advancement and workplace shirking. The x-axis shows the days relative to critical ChatGPT breakdowns (lasting over 30 minutes during working hours), while the y-axis represents the average time individuals spent on entertainment apps (like TikTok) from 9 AM to 5 PM on weekdays. The blue, orange, and green lines represent non-ChatGPT users, all ChatGPT users, and the top 50% of frequent ChatGPT users, respectively. The figure shows that when ChatGPT experiences breakdowns lasting over 30 minutes, ChatGPT users reduce workplace shirking by 5-10%. This preliminary result provides evidence consistent with the hypothesis that ChatGPT enhances employee productivity and helps employees complete their tasks more quickly. However, due to agency conflicts, the extra time saved may be used for leisure, potentially leading to increased workplace shirking.

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