From D.C. to VC: Leveraging Government Expertise in Venture Capital

Venture capital firms regularly hire skilled professionals to scout and mentor their portfolio companies. Building a novel dataset that links career transitions,
federal award records, and startup outcomes, I document a growing flow of human capital from government agencies into VC organizations. I exploit the 2019 federal government shutdown as an exogenous shock to the supply of skilled officials to identify the causal impact of these hires on portfolio firms’ access to government awards and subsequent performance. Startups with former officials in direct roles, as lead partners or VC-appointed directors, secure nearly $1 million more in federal awards and are 8 percentage points more likely to obtain follow-on financing. The evidence points to a skill-based matching mechanism: rather than quid pro quo or reputational motives emphasized in the revolving door literature, multifaceted expertise emerges as the central driver of hiring decisions. These findings uncover a previously unexplored channel through which government-to-private sector mobility supports innovative but resource-constrained firms.