Common Ownership, Firm Hiring and the Allocation of Human Capital

Abstract:

We study how common ownership shapes the allocation of human capital across firms in the U.S. venture capital ecosystem. Combining LinkedIn-based employment histories from Revelio Labs with comprehensive venture capital investment data from PitchBook and VentureXpert, we construct a panel of 94,113 ventures between 1990 and 2021. We exploit the staggered adoption of corporate opportunity waiver statutes across U.S. states as a plausibly exogenous shock to common venture capital ownership. Ventures sharing investors with other firms in the same local market exhibit significant increases in employment and worker mobility, with no corresponding increase in wages. Worker reallocation also operates within investor portfolios: bilateral mobility between commonly owned ventures is significantly higher than between independent ones, especially when ventures operate in the same industry, suggesting that shared investors facilitate the redeployment of workers across portfolio companies. The positive effects of common ownership on firm employment and worker mobility attenuate in concentrated local labor markets, where concerns about common ownership softening labor market competition are strongest.  Our results indicate that common ownership in venture capital generates network synergies that facilitate the reallocation of human capital across portfolio firms, supporting firm growth and aggregate worker mobility, with labor market competition concerns emerging only in already-concentrated markets.