Hybrid entrepreneurship – entry to entrepreneurship while remaining in employment – is beneficial for entrepreneurs as it reduces the risk of founding a startup and enables learning. Yet little is known about how hybrid entrepreneurship affects startup performance. We propose that two mechanisms inform the impact of hybrid entrepreneurship: (a) complementarity between labor input into startup and employment, respectively, and (b) audience effects, referring to the signal implied by hybrid entrepreneurship towards external stakeholders. We suggest that the combination of these mechanisms will lead startups launched via hybrid entrepreneurship to exhibit lower performance compared to those launched by full-time entrepreneurs. We confirm our conjectures using a unique dataset on European academic biotechnology startups. Suggesting lack of complementarity, we find that the negative effect of hybrid entrepreneurship on startup performance is attenuated when university inventions are based on applied (as opposed to basic) research and when there is a co-founder with industry experience. Suggesting audience penalties, we find that the negative effect of hybrid entrepreneurship on startup performance is attenuated when an academic entrepreneur is a star inventor.
