Abstract:

This study analyzes how growth and monitoring activities relate to investors’ funding decisions on digital start-up firms. We define investor funding decision here as the funding amount and how many funding rounds in specified start-ups. Meanwhile, we measure a start-up growth by the number of acquisitions undertaken by the start-up and the number of users’ monthly visits to the website. We then define monitoring activities as the number of board members assigned by a funder to the start-ups and the number of lead investors providing funds for the start-up. We seek to find whether there is difference between investor decisions regarding financing digital start-up firms in developed countries versus those made in emerging countries, using a data sample of 300 start-ups with the highest rankings worldwide. Using multiple linear regression of OLS (Ordinary Least Square), the results demonstrate that both the growth and monitoring activities positively relates to the amount of funding and the number of funding rounds for a digital start-up company.  We also determined there is no significant difference in investor funding decisions between digital start-ups in developed and those in emerging countries.