New venture teams and acquisition: Team composition matters

This study examines the relationship between new venture team characteristics on the acquisition likelihood of the new venture. We find that for a US sample of new ventures: new venture teams with equal numbers of females and males, as well as those with higher average education levels are more likely to be acquired. In addition, our results show that higher diversity in industry experience may decrease the acquisition likelihood of new ventures. This implies that teams consisting of both extremes, highly industry experienced and non-experienced members, tend to have the lowest acquisition likelihood all else being equal. This study adds to the rare empirical evidence regarding the factors associated with the exit of new ventures founded by teams, by providing evidence on the effect of team diversity and human capital level on acquisition likelihood. The results may be of interest to both entrepreneurs and external investors.