Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/301306 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11180
Publisher: 
CESifo GmbH, Munich
Abstract: 
We examine how investor-level tax incentives affect financing for start-ups using the introduction of a generous tax deduction for qualified angel and VC investment in China as a quasi-natural experiment. We find that the tax incentive increases funding for eligible start-ups, with stronger responses from larger and more experienced investors. The tax incentive leads to substitution between eligible and non-eligible investments. There is no evidence that the tax incentive lowers investment quality. We further show that the investor-level tax incentive encourages firm entry into affected industries, especially in cities more exposed to venture capital funds.
Subjects: 
venture capital
angel investment
tax incentives
entrepreneurship
JEL: 
G24
G32
H25
L26
Document Type: 
Working Paper
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