Abstract
AbstractThe high-risk decision environment and information asymmetries associated with investing in early-stage startups in pitch competitions make angel investors prone to biased decision-making. Drawing from social perception theory, this study examines how angel investors’ decisions are influenced by observed personal characteristics of entrepreneurial teams, based on representative stereotypes. Analyzing a dataset of N = 553 startup pitches from the German televised competition Die Höhle der Löwen, this study reveals that the likelihood of securing deals with German angel investors and the resulting business valuations are linked to certain superficial team characteristics. Specifically, the age, diverse ethnicity, and physical attractiveness of the entrepreneurial team have a significant positive effect on deal probabilities. Moreover, angel investors offer lower deal valuations to teams of older and female entrepreneurs, suggesting the presence of a systematic bias. These insights contribute to understanding the role of stereotypes in entrepreneurial finance and address the challenges related to bias in access to capital for early-stage startups in Germany.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.