Eldar, Grennan, and Waldock exploit the staggered adoption of corporate opportunity waivers, laws that shield VCs and directors from liability when they hold stakes in competing startups, across nine states from 2000 to 2016 as a quasi-natural experiment, finding startups incorporated in treated states become 11.8 percentage points more likely to share a VC investor with another startup in the same industry. Using this legal shock as an instrument, they find common VC investment raises the probability of an IPO by 3.7 percentage points and lowers the probability of failure by 12.5 percentage points, while also increasing rounds raised, deal size, and late-stage financing, with VC directors serving on multiple related boards, 1.8 more per startup on average, as the primary mechanism, since results only appear for startups that actually have a VC director on their board. The findings favor an informational-spillover explanation over a rent-extraction one: VC funds with more within-industry common investment outperform their benchmark index, and same-industry startups sharing a VC are also more likely to be acquired by another company in that VC's portfolio, consistent with VCs efficiently allocating business opportunities across portfolio companies rather than favoring one at another's expense.

Founders worried about pitching a VC that already backs a competitor get a genuinely counterintuitive, causally identified reassurance: rather than exploiting shared information to favor one portfolio company over another, common VC investors are associated with better outcomes across the board, higher IPO odds, lower failure rates, and more capital raised, likely because informed VCs can allocate business opportunities more efficiently among the startups they know best. This is one of the few papers to identify a concrete mechanism, cross-appointed VC directors sitting on multiple related boards, for how informational spillovers inside a VC portfolio actually operate, giving researchers and practitioners a specific, testable channel rather than the vague, unmeasured notion of VC value-add invoked elsewhere in the literature. LPs evaluating a fund get a useful signal here too, since funds with greater within-industry common investment are shown to outperform their benchmark index, suggesting a GP's pattern of concentrated, related bets within a sector, rather than broad diversification, can itself be read as a positive marker of investment skill and portfolio company support.