US venture capitalists are more likely to invest in startups with executives of the same ethnic origins as themselves, and these investments tend to bring superior payoffs, benefiting from close VC-manager communication and coordination, say Deepak Hegde of New York University and Justin Tumlinson of the University of Munich. About 84pc of US venture capitalists are of Anglo-Celtic or European origin, a proportion that nearly reflects these groups’ share of the country’s population. And 3.74pc and 2.96pc of US-based VC partners are of Indian and Chinese origin, respectively, about six and four times these ethnic groups’ share of the population.

(Source: Management Science)

Published in Dawn, Economic & Business, July 7th, 2014