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Attractiveness, ethnicity, and stage financing: exploring heuristics in venture capital staging

Attractiveness, ethnicity, and stage financing: exploring heuristics in venture capital staging Understanding heuristics in stage financing is imperative, given the consequences of staging for both new venture entrepreneurs and VC investors. This study documents how entrepreneurs’ physical attractiveness affects VCs’ staging intensity during the early stages of the funding process, while taking into account the ethnic constellation of a given VC – entrepreneur dyad. Using a dataset for a representative sample of 231 European IT-ventures, the study finds that physical attractiveness of the lead entrepreneur and the ethnic constellation of a given VC-entrepreneur dyad independently and jointly affect a VC’s staging intensity during the early stages of the financing process. These findings were subjected to a two-stage least squares analysis and Heckman selection models. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Industry and Innovation Taylor & Francis

Attractiveness, ethnicity, and stage financing: exploring heuristics in venture capital staging

Industry and Innovation , Volume 30 (3): 30 – Mar 16, 2023
30 pages

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References (118)

Publisher
Taylor & Francis
Copyright
© 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.
ISSN
1469-8390
eISSN
1366-2716
DOI
10.1080/13662716.2022.2164257
Publisher site
See Article on Publisher Site

Abstract

Understanding heuristics in stage financing is imperative, given the consequences of staging for both new venture entrepreneurs and VC investors. This study documents how entrepreneurs’ physical attractiveness affects VCs’ staging intensity during the early stages of the funding process, while taking into account the ethnic constellation of a given VC – entrepreneur dyad. Using a dataset for a representative sample of 231 European IT-ventures, the study finds that physical attractiveness of the lead entrepreneur and the ethnic constellation of a given VC-entrepreneur dyad independently and jointly affect a VC’s staging intensity during the early stages of the financing process. These findings were subjected to a two-stage least squares analysis and Heckman selection models.

Journal

Industry and InnovationTaylor & Francis

Published: Mar 16, 2023

Keywords: Venture capital; attractiveness; ethnicity; heuristics; biases; G24; G30; D91

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