Interplay of Human and Structural Capital Signals for New Technology Ventures in Early-Stage Venture Capital Funding

Abstract

By drawing on the socio-cognitive perspective of signalling theory, this study examines how the interplay of human and structural capital signals may be associated with early-stage venture capital (VC) funding for new technology ventures. Using a dataset of 453 French new technology ventures operating in the digital industry, the findings reveal that strong signals such as patents or trademarks enhance firm legitimacy, while weaker signals such as education level or degrees from elite institutions reinforce team credibility. Both types of signals are positively correlated with early-stage VC funding. However, the results indicate that combining signals of the same dimension and strength yields diminishing returns because additional within-dimension signals are informationally redundant, add little new information about legitimacy or credibility, and lower the likelihood of funding. In noisy, information-saturated contexts, overlapping signals create redundancy and investor cognitive overload rather than facilitating decision-making. This study advances signalling theory by framing signal interactions as a strategic portfolio choice, and outlines implications for entrepreneurial research, investor decision-making, and future work on signalling strategies.