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

Time:2016-05-25 14:21:00  Hits:[]

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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