​Using the data from Crunchbase, the leading platform for detailed information on early-stage firms, we document evidence of geographic dispersion and industry declustring of new startups over time. We show that this trend is associated with investment incentives of local angel investors. Specifically, angel investors are more likely to provide

early-stage fundings to a firm dissimilar to its geographic peers. We find that this result is attributable to the different diversi cation preferences of angel investors. Angel investors make geographically concentrated investments with industry diversification, while venture capital investors make industry-concentrated investments with relatively greater geographic diversification.​

Keywords: Startup Geographic Location, Startup Business Similarity, Angel Investment, Venture Capital Investment

JEL Classification: M13, L26​