Essays on Strategy, Startups, and Venture Capital

This dissertation examines how external forces influence the financing of innovative startups. While venture capital typically focuses on evaluating technology and entrepreneurs, investors also respond to factors that lie outside the market, such as regulation, geography, and reputational shocks. These forces shape where startups locate, how they are funded, and how ecosystems evolve when uncertainty increases. The first paper studies how geography and regulation interact in the location choices of crypto startups in Europe and the United States. The findings show that U.S. startups cluster both in established hubs such as Silicon Valley and in newer entrepreneurial centers such as Miami. In Europe, startups tend to settle in countries that offer favorable regulatory frameworks, for example Switzerland and Estonia. This illustrates the trade-off founders face between the advantages of being in a traditional hub and the benefits of supportive legislation. The second paper analyzes the introduction of Bitlicense in New York in 2015. This regulation imposed new compliance requirements for crypto firms. Using a difference-in-differences approach, the study finds that Bitlicense did not reduce startup creation or the ability of firms to secure funding. The results suggest that the regulation may have worked as a screening and signaling device, allowing serious firms to remain active while deterring weaker entrants. The third paper investigates the collapse of FTX in 2022 and its consequences for venture investors. The results show a strong decline in early-stage investments among VCs that were previously active in the crypto sector, along with reduced syndication and lower exit opportunities. This demonstrates that scandals can generate sizable reputational costs that extend beyond the firm at the center of the event. Overall, the papers show that non-market forces can strongly influence entrepreneurial finance. They provide practical insights for investors and policymakers who aim to support the development of emerging technology ecosystems.