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Prediction and control under uncertainty: Outcomes in angel investing

  • Wiltbank, Robert
  • Read, Stuart
  • Dew, Nicholas
  • Sarasvathy, Saras D.
Registered author(s):

    Venture investing plays an important role in entrepreneurship not only because financial resources are important to new ventures, but also because early investors help shape the ventures' managerial and strategic destiny. In this study of 121 angel investors who had made 1038 new venture investments, we empirically investigate angel investors' differential use of predictive versus non-predictive control strategies. We show how the use of these strategies affects the outcomes of angel investors. Results show that angels who emphasize prediction make significantly larger venture investments, while those who emphasize non-predictive control experience a reduction in investment failures without a reduction in their number of successes.

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    Article provided by Elsevier in its journal Journal of Business Venturing.

    Volume (Year): 24 (2009)
    Issue (Month): 2 (March)
    Pages: 116-133

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    Handle: RePEc:eee:jbvent:v:24:y:2009:i:2:p:116-133
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbusvent

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    6. Einhorn, Hillel J & Hogarth, Robin M, 1986. "Decision Making under Ambiguity," The Journal of Business, University of Chicago Press, vol. 59(4), pages S225-50, October.
    7. Jain, Bharat A., 2001. "Predictors of performance of venture capitalist-backed organizations," Journal of Business Research, Elsevier, vol. 52(3), pages 223-233, June.
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    12. Gifford, Sharon, 1997. "Limited attention and the role of the venture capitalist," Journal of Business Venturing, Elsevier, vol. 12(6), pages 459-482, November.
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