The role of entrepreneurs' perceived competence and cooperativeness in early-stage financing

Svetek, Mojca (author)

Building on social-psychological insights into social perception and judgment and empirical findings from the entrepreneurship literature, we propose that early-stage equity investors look at two main dimensions to assess entrepreneurs seeking early-stage financing: competence and cooperativeness. In all, 84 angel investors and venture capitalists active in Europe participated in a conjoint experiment. The results show that investors prioritize entrepreneurs’ competence over their cooperativeness. Entrepreneurs’ competence is even more appealing to investors when combined with coachability. We find that entrepreneurs can compensate for a lack of experience by demonstrating solid market knowledge and appearing to be coachable. Furthermore, the results suggest that investors differ in their consideration of entrepreneurs’ cooperativeness, but not competence, when making investment decisions—a finding that is conditional on investors’ usual level of involvement in their portfolio ventures. We discuss these findings from a theoretical and practical perspective.

• Language: English
• Keywords: start-up, financing, cooperation, competence, social cognition, venture capital, angel investing, investment decision-making, value-adding behavior
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2023
• Number of pages: Str. 2047–2076
• Numbering: Vol. 47, iss. 6
• PID: 20.500.12556/RUL-143708
• UDC: 658
• ISSN on article: 1042-2587
• DOI: 10.1177/10422587221127000
• COBISS.SI-ID: 124829699
• Publication date in RUL: 10.01.2023

Record is a part of a journal

• Title: Entrepreneurship theory and practice
• Shortened title: Entrep. theory pract.
• Publisher: SAGE
• ISSN: 1042-2587
• COBISS.SI-ID: 2878492

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.

Secondary language

• Language: Slovenian
• Keywords: zagonsko podjetje, financiranje, sodelovanje