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What Determines the Success of Startups?

Professor Harshit Rajaiya headshot

Harshit Rajaiya, an assistant professor of finance, is our newest faculty member. He completed his PhD at Boston College. We interviewed him to learn more about his research on entrepreneurial finance.

Why did you choose to study finance? 

I enjoy thinking about problems, whether mathematical or real-world problems. There was a boom in startup firms in India around the time I graduated from college. While some of the startups succeeded, many failed. I was especially curious about the factors determining investments in startups and their eventual success or failure. My finance PhD program equipped me with the theoretical understanding of the actions of individuals, e.g., entrepreneurs or investors, and the empirical tools to pursue my research endeavours.

Can you discuss a recent publication that you are particularly excited about? 

My recent study examines the impact of employee ratings on a public firm’s external financing and investment policies. The explosive growth of the internet has led to a spike in information produced by non-traditional sources, e.g., non-executive employees or consumers. My study analyzed the role of Glassdoor ratings — anonymous online reviews by employees — on a firm’s decision to issue equity versus debt to raise external financing and on the stock market’s reaction to those equity issues. While Glassdoor ratings may not convey “hard information” like financial ratios, they convey relevant “soft information,” e.g., work culture, which affects a firm’s financing and investment decisions.

How can your research influence business communities in Canada? 

My research focusses on the external financing decisions of public firms, the role of intellectual properties in success of startup firms and the role played by venture capitalists and angel investors in startup ecosystems. My work suggests that intellectual properties like patents and trademarks may not only benefit Canadian startups to raise external financing and enable their future success but will also help Canadian public firms enhance their access to the equity market. Further, better online employee ratings may help Canadian public firms raise equity financing for their valuable projects. Lastly, investors (retail or institutional) must pay attention to a firm’s intellectual properties and online reviews before executing their stock market decisions.

About the Author

Rania Nasrallah a rejoint le bureau de recherche Telfer en 2019. Elle a obtenu son doctorat en médecine à l'Université d'Ottawa et apporte à ce rôle plus de deux décennies d'expérience en recherche. Rania participe à tous les aspects du mandat du Bureau de la recherche et est responsable de fournir un large éventail de services aux membres du corps professoral et aux étudiants de recherche de deuxième et troisième cycle. Elle gère les subventions internes et les bourses d'études, et participe à la stratégie de communication de la recherche. Elle fournit également un soutien aux chercheurs avant l'attribution des subventions afin de maximiser le succès du financement au niveau national et international. En outre, elle travaille en étroite collaboration avec le Vice-doyen à la recherche pour élaborer et mettre en œuvre des stratégies visant à améliorer le financement et la vélocité de la recherche à Telfer, conformément à notre vision pour créer un meilleur Canada et un meilleur monde pour tous.<br/><br/>Rania Nasrallah joined the Telfer Research Office in 2019. She completed her PhD in Medicine at the University of Ottawa and brings over two decades of research experience to this role. Rania is involved in all aspects of the mandate of the Research Office and is responsible for providing a wide range of services to faculty members and research based graduate students. She manages internal grants, student awards, and participates in the research communication strategy. She also provides pre-award support to researchers to optimize funding success nationally and internationally. In addition she works closely with the Vice Dean Research to develop and implement strategies to enhance research funding and intensity at Telfer following our vision to create a better Canada and a better world for all.

Profile Photo of Rania Nasrallah