The grant stack signal and the geography myth: Rethinking early-stage deep-tech financing

Belz & Zapatero (2019) report that two or more SBIR awards boost the likelihood of raising VC by roughly 30%, while relocating away from the home university region doesn’t improve VC success—contrary to standard advice. This project sharpens causality using SBIR score thresholds and agency budget shocks to identify the “dose-response” effect of grant stacking on VC interest, syndicate quality, and founder-friendliness of terms. We then revisit the “move to the Valley” norm using difference-in-differences around accelerator admissions, city-level VC tax incentives, and changes in remote investing norms. External validity would be probed across legal regimes with different contracting practices (Megginson, 2025; Weitnauer, 2022) and controlled for country-specific round-size patterns (Taboga, 2021). We also examine whether specialized state-backed funds (Eremchenko, 2021) amplify or substitute the grant signal. The novelty lies in reframing grants as sequential signals that can substitute for geography and in rigorously testing a costly founder behavior (relocation) that may not pay off. Policy-wise, the results could inform optimal grant staging and regional deep-tech strategies; for founders, it could validate staying put while stacking credible non-dilutive signals.

References:

1. Impact of Government Grants on Venture Capital Funding of Deep Technology University Spinoffs. A. Belz, F. Zapatero (2019). Social Science Research Network.
2. Towards a Global Model of Venture Capital?. W. Megginson (2025). Journal of Applied Corporate Finance.
3. International Venture Capital Terms. Wolfgang Weitnauer (2022).
4. Specialized Venture Capital Funds as a Tool for Supporting Investment in Advanced Technologies. О. А. Eremchenko (2021). The Economics of Science.
5. Cross-country differences in the size of venture capital financing rounds: a machine learning approach. Marco Taboga (2021). Empirical Economics.