Fostering digital entrepreneurship from startup to scaleup: The role of venture capital funds and angel groups

Digital entrepreneurship highly relies on external sources of financing to foster growth. This study aims at investigating how angel groups and venture capital (VC) funds affect growth of digital new ventures in their startup and scaleup phase. To address this aim, we analyzed 372 investment rounds regarding 256 Italian-based new ventures. The key findings are fourfold. First, VC funds positively affect the growth of digital new ventures. Second, digital scaleups, in line with the overall sample of digital new ventures, show a linear path of growth positively correlated with VC funding. Third, the relationship between funding received and growth in digital startups follows an inverted U-shape - with the optimal level within our sample set at 300,000$. Finally, no evidence emerges on the angel groups contribution to the growth of digital new ventures in both startup and scaleup phase. These findings are hence discussed in the light of extant literature on venture financing as well as entrepreneurial bias literature, to provide insight for both researchers and practitioners in digital entrepreneurship.