- Walpert, Eric [Browse]
- Senior thesis
- 81 pages
- Sannikov, Yuliy [Browse]
- Princeton University. Department of Economics [Browse]
- Class year
- Restrictions note
- Walk-in Access. This thesis can only be viewed on computer terminals at the Mudd Manuscript Library.
- Summary note
- My paper explores the relative value of being a social media related company on venture
capital funding across all rounds of financing within the United States over the last
two years. Although venture capital as an industry has decreased on the whole in recent
months, this paper explores the effects within the industry that are specific to social media
companies. Using a combination of truncated regression and multiple imputation, I present
results that show the differences in funding for social media companies and how they vary
by round of financing, timing of the transaction, and broader industry of the target company.
Ultimately, I demonstrate how social-related companies appears to suffer strongly
as they approach later rounds of financing (for Series E funding, ranging from -117% to -
284% of what they would otherwise receive). I additionally show that companies that focus
almost exclusively on social media appear to have seen their advantage over other companies
erased over time. Finally, my results demonstrate a clear difference in the effect/value
of social media in different industries. All of these results could be backed up by stronger
or more complete data, pointing the way for future research.