Financing J-Curves in Venture Capital

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ID: 328277
2026
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Abstract
ABSTRACT Startups face a trade-off between short-term profitability and long-term growth. Their cash flows are said to follow a so-called J-curve. The shape of the curve depends on investors’ financing capacity: their ability to sustain prolonged periods of negative cash flow. US venture capitalists are often believed to have greater financing capacity. We examine a large Swedish dataset with detailed cash flow information. Swedish startups backed by US venture capitalists experience deeper J-curves, with larger short-term losses and higher long-term sales, relative to those backed by non-US venture capitalists. These results are consistent with US venture capitalists having greater financing capacity: they can provide more funding directly and have better access to later-stage investors.
Reference Key
openalex_W7212022165 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Thomas Hellmann, Alexander Montag, Joacim Tå̊g
Journal international review of finance
Year 2026
DOI
10.1093/rof/rfag037
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