What drives early stage equity investors’ propensity to invest in university spinoffs? an experiment on the signaling role played by university

The university origin of university spin-offs (USOs) makes them unique in the eyes of external equity investors, but the specific circumstance in which the university origin actually contributes or hampers investors’ propensity to invest in USOs is unclear. To address this gap, we build on signaling theory and hypothesize that university ownership acts as a quality signal whose effect on investors’ propensity to invest is positively moderated by the scientific reputation of the parent university. We find support to our hypotheses through a randomized within-subject experimental study. Our findings contribute to the academic entrepreneurship and the entrepreneurial finance literatures.