Are “Better” Ideas More Likely to Succeed? An Empirical Analysis of Startup Evaluation

2016-05-20 08:20:18

by Erin Scott, National University of Singapore

Wednesday, May 25, 2016 | 2:00 - 3:30 PM | Room 337, HSBC Business School

Abstract

This paper studies whether experienced entrepreneurs, executives, and investors can predict

the subsequent outcomes of early-stage ventures by reading succinct summaries of their

business ideas. We collect and examine data on 652 ventures. In research-and-development intensive sectors, the ideas that elicit more positive evaluations at early stages are significantly

more likely to reach commercialization or to raise substantial funding; this pattern does not

hold for ventures in non-R&D-intensive sectors. Our results suggest that, in R&D-intensive

sectors, the initial business idea plays a central role in determining entrepreneurial success.

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