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The second measure classifies startup companies as “treated” if they belong to the same primary industry and operate in the same industry verticals as the acquired company. The primary industry, according to Pitchbook, is the industry subgroup in which the company primarily operates. The industry vertical is a specific element of the company that is not accurately captured by industry subgroup. Verticals are useful in identifying companies that offer niche products. For example, WhatsApp belongs to the primary industry Communication Software, which is one of the sixteen subgroups in the industry group Software, which in turn is one of the six industry groups in the sector Information Technology. Further, WhatsApp belongs to the mobile sector vertical. We collect data on similar startup companies (to the target) for each of 7 observation years for each of the 9 acquisitions – the 3 years before the acquisition year + the acquisition year + the 3 years after. So we should have data on similar start-up companies for 63 observation years. As Table 2 shows, there is a trade-off between narrowing the definition of similarity and reducing the number of “treated” early stage companies. If we use a threshold of 85%, we lose 14% of the observations and one quarter of the remaining observations is based on a set of less than 5 similar companies. If we increase the limit to 90%, we lose almost a third of the sample and for half of the remaining ones we have at most four companies as a comparison set. By contrast, if we lower this threshold to 75%, the comparison set consists of up to 480 companies, possibly increasing the noise. For this reason, we start with an initial threshold of 80%