The authors aim to bridge this gap and highlight the inherent asymmetry between failure and success. While success necessitates a combination of skill and luck, failure can arise from either a lack of skill or unfortunate circumstances. The study seeks to investigate whether investors exhibit a "failure-averse" attitude, discounting failed entrepreneurs even with additional information on their skills, or if they make rational judgments by considering skill-related cues and funding new startups accordingly.
To explore these questions, the researchers employ experiments within the context of equity crowdfunding. They examine how prospective crowdfunding investors integrate information about past outcomes and entrepreneurial skill. The results indicate that investors effectively incorporate informational cues and make rational assessments. The study underscores the increasing ease of launching entrepreneurial ventures due to digital advancements, resulting in higher failure rates. It also highlights the changing landscape of entrepreneurship, where many individuals engage in multiple ventures, including those who have experienced prior failures. The authors emphasize the importance of understanding how investors evaluate past entrepreneurial outcomes and entrepreneurs with failure experiences. By shedding light on this topic, the study aims to contribute to the understanding of entrepreneurial resource acquisition in the current entrepreneurial landscape.
