Hsu, David H2023-05-222023-05-222004-08-012016-06-27https://repository.upenn.edu/handle/20.500.14332/40434This study empirically evaluates the certification and value-added roles of reputable venture capitalists (VCs). Using a novel sample of entrepreneurial start-ups with multiple financing offers, I analyze financing offers made by competing VCs at the first professional round of start-up funding, holding characteristics of the start-up fixed. Offers made by VCs with a high reputation are three times more likely to be accepted, and high-reputation VCs acquire start-up equity at a 10–14% discount. The evidence suggests that VCs' “extra-financial” value may be more distinctive than their functionally equivalent financial capital. These extra-financial services can have financial consequences.This is the peer reviewed version of the following article: Hsu, D. H. (2004), What Do Entrepreneurs Pay for Venture Capital Affiliation?. The Journal of Finance, 59: 1805–1844., which has been published in final form at DOI: 10.1111/j.1540-6261.2004.00680.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving (http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms).Business Administration, Management, and OperationsArticle