The Impact of Non-stop Flights to Silicon Valley on Raising Venture Capital in the U.S. and Abroad

Abstract

Does being a non-stop flight away from Silicon Valley help entrepreneurs access venture capital? With its abundance of researchers and investors, Silicon Valley leads the world in entrepreneurship. In Silicon Valley, venture capital investors (VCs) and startups benefit from proximity, forming strong relationships and meeting frequently in person. VCs often choose to focus their operations locally, bringing down the costs of monitoring investments. Not all entrepreneurs can locate themselves in this global hub and without a direct connection to Silicon Valley some may find it difficult to tap into the extensive resources clustered in the region. I show that startups operating in cities with non-stop connections to Silicon Valley benefit immensely from direct flights. I find that this connection matters more for cities outside the U.S. A new daily flight from Silicon Valley to an international city leads to $23 million of additional VC raised by startups in the region.