We study the participation of nascent firms in open source communities and its implications forattracting funding. To do so, we exploit rich data on 160,065 US startups linking information fromCrunchbase to firms’ GitHub accounts. Estimating a within-startup model saturated with fixedeffects, we show that startups accelerate their activities on the platform as they approach their firstfinancing round. The intensity of their involvement on GitHub declines in the twelve months after.Startups intensify those activities that rely on external technology sources above and beyond thetechnologies they themselves control. Exploiting a shock that reduced the relative cost of internalcollaborations, we provide evidence that startups’ decision to integrate external sources of knowledgein their production function hinges on the relative cost vis-`a-vis internal collaboration. Applyingmachine learning to classify GitHub projects, we further unveil that the most prevalent among theseexternal activities are related to software development, data analytics, and integration. Our resultsindicate that VCs and renowned investors are the most responsive to these activities.
Presenter: Maria P. Roche (Harvard Business School)
Coauthors: Annamaria Conti (IE Business School) and Christian Peukert (HEC Lausanne)
Discussant: David Hsu (The Wharton School of the University of Pennsylvania)