The Distinctiveness of Entrepreneurs’ Experience Role in Investment Screening Decisions

Thesis Defense
The Distinctiveness of Entrepreneurs’ Experience Role in Investment Screening Decisions:
What Does Really Matter? a Venture Capitalist – Entrepreneur’ Dyad Inquiry.

Anna Souakri, PhD candidate in the PhD programme ESCP, will publicly defend her PhD thesis in Management Sciences.

16 December 2019 – 2:30 p.m. (CET)
ESCP Business School Campus République
Room 4310

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Abstract

We undertook a threefold study to explore the distinctive role played by entrepreneurs’ experience among other characteristics. First, we aim to specify what types of experience really matter to VCs. How do they value different forms of human capital such as education and non-entrepreneurial work experience compared to entrepreneurial experience? Does it vary across VCs with different experience? Our second purpose is to entrepreneurs. Third, we compare VCs’ to entrepreneurs’ evaluations with the goal to provide a complementary demand-side explanation – i.e. entrepreneurs - to the consistency of the reject rate, a still unexplored question.

We ran a twofold conjoint analysis with active VCs and entrepreneurs. Our results show that if entrepreneurial experience drives primarily the screening decisions, personal VCs’ characteristics influence their evaluations, notably toward entrepreneurs the most similar to themselves. We also find that entrepreneurs with failures are not blacklisted and are preferred to entrepreneurs without failure under some circumstances. When comparing VC’s and entrepreneurs’ evaluations, we find a divergence. Entrepreneurs attribute a larger importance to the types of entrepreneurial experiences they can control than VCs. We suggest that biases caused by their exposition to hubris explained such divergence.

Overall, our research points out the importance and the specificity of entrepreneurial experience of both VCs and entrepreneurs, their interactions and the cognitive biases shaped by their respective experiences in explaining the screening decisions and its highly selective nature. We contribute to narrow down the research gap about the relationship between entrepreneurial experience specificity and screening evaluations considering the interactions in the VC – entrepreneur dyad, and, more generally, heuristics in decision-making processes.

Jury