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.
Attractiveness, ethnicity, and stage financing: Exploring heuristics in venture capital staging
This study documents how entrepreneurs’ physical attractiveness affects VCs’ staging intensity during the early stages of the funding process.
Marc D. Bahlmann - Assistant Professor
Marc Bahlmann is assistant professor at the Management and Organization department of the Vrije Universiteit Amsterdam. His educational background is in Business Administration. After a PhD in the field of Economic Geography, Marc now currently studies irrational decision-making in the context of innovation and strategy. He has studied how physical attractiveness of entrepreneurs and VCs affect VC investment decisions and financial risk-taking.
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