of entrepreneurial behavior. Unfortunately, we are
unable to address this possibility with our data. At
the very least, even if venture capitalists ignore all
information in planning documents, and this information
is correlated with other unobservables or
learned from other sources, our results indicate that
social mediation and planning documents include
information that is weakly predictive of venture
funding decisions.
Fourth, we analyze a convenience sample. Although
we go to significant lengths to understand
its representativeness, we cannot know if these
results would be replicated using data from a
different time frame or a different industry. We
leave this to future research.
Finally, we are likely understating the value of
the information contained in planning documents
due to the retrospective nature of the sample. Information
about the proposed business idea is likely
important to venture decision makers. Unhappily,
after the fact it is not possible to reliably evaluate
the quality of business planning materials of
pre-dot-com bust companies—as any such evaluation
would be colored by one’s experience of
the events of the intervening years. An alternative
research design would examine proposals as
they arrived across a sample of venture capitalists.
For every proposal that was eventually funded, a
matched proposal that was rejected would be chosen.
At that point, either an internal evaluation
of the proposals would be collected or, alternatively,
the proposal would be rated by an unbiased
panel. A central problem with this proposed design
is that very few solicitations are actually funded.
Hence, the study would require the recruitment of
a fair number of participants. While we do not
believe this to be impossible, it would be challenging.
CONCLUSION
In this study we have advanced understanding of
the use of cues in strategic settings by empirically
identifying and characterizing the validity of
cues associated with successful resource acquisition
in the context of VC funding, a particularly
important instance of fast decision making under
uncertainty. We have exploited a large sample of
funding requests of known representativeness to
address liabilities of prior studies
of entrepreneurial behavior. Unfortunately, we are
unable to address this possibility with our data. At
the very least, even if venture capitalists ignore all
information in planning documents, and this information
is correlated with other unobservables or
learned from other sources, our results indicate that
social mediation and planning documents include
information that is weakly predictive of venture
funding decisions.
Fourth, we analyze a convenience sample. Although
we go to significant lengths to understand
its representativeness, we cannot know if these
results would be replicated using data from a
different time frame or a different industry. We
leave this to future research.
Finally, we are likely understating the value of
the information contained in planning documents
due to the retrospective nature of the sample. Information
about the proposed business idea is likely
important to venture decision makers. Unhappily,
after the fact it is not possible to reliably evaluate
the quality of business planning materials of
pre-dot-com bust companies—as any such evaluation
would be colored by one’s experience of
the events of the intervening years. An alternative
research design would examine proposals as
they arrived across a sample of venture capitalists.
For every proposal that was eventually funded, a
matched proposal that was rejected would be chosen.
At that point, either an internal evaluation
of the proposals would be collected or, alternatively,
the proposal would be rated by an unbiased
panel. A central problem with this proposed design
is that very few solicitations are actually funded.
Hence, the study would require the recruitment of
a fair number of participants. While we do not
believe this to be impossible, it would be challenging.
CONCLUSION
In this study we have advanced understanding of
the use of cues in strategic settings by empirically
identifying and characterizing the validity of
cues associated with successful resource acquisition
in the context of VC funding, a particularly
important instance of fast decision making under
uncertainty. We have exploited a large sample of
funding requests of known representativeness to
address liabilities of prior studies
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