Product market competition, venture capital, and the success of entrepreneurial firms

Douglas J. Cumming*, Giang Nguyen, My Nguyen

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)


We document a positive effect of product market competition (PMC) on venture capital (VC) staging. Employing large tariff rate reductions as an exogenous shock to PMC, we find that large tariff reductions lead to a greater likelihood of staged financing and a larger number of financing rounds. Cross-sectional analyses reveal that the effect is stronger for entrepreneurial firms that are younger, operate in high-tech and manufacturing industries, or receive investments from less reputable and inexperienced VCs. Our findings are consistent with the notion that by mitigating business uncertainty and survival risk, VC staging acts as a complement to PMC for enhancing entrepreneurial firms’ success.

Original languageEnglish
Article number106561
JournalJournal of Banking and Finance
Publication statusPublished - 2022 Nov


  • Monitoring
  • Product market competition
  • Success
  • Venture capital staging

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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