Making Long Distance Work: Increasing Investment Returns of International Business Angel Syndicates (WITHDRAWN)

This paper investigates the performance effects of international business angel investments in early-stage ventures. Building on theoretical arguments relating to transaction costs of international investments, we disentangle the costs and benefits of geographic and cultural distance in early stage investing. With a unique dataset of 797 investment decisions made via an international angel investment platform, we find an inverted U-shaped relationship between distance and investment returns. We further show that this relationship is moderated by business angel syndication such that in large syndicates, investors earn consistently higher returns and are less sensitive to the costs of both geographic and cultural distance. With these findings, we provide a new perspective to the discussion on cross-border venture investments, contribute to the emerging literature on international angel investment platforms, and develop the mechanisms of transaction cost theory in a new setting.