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Becker Meets Sharks: Angel Financing and Venture Performance

Author

Listed:
  • Zhihong Shi

    (State University of New York at Old Westbury)

  • Elena Smirnova

    (State University of New York at Old Westbury)

  • Shalei Simms

    (State University of New York at Old Westbury)

  • Christopher Castro-Andrade

    (The City University of New York)

Abstract

We study small-scale venture capital investment, or angel investment, through the popular reality show Shark Tank with the goal of ascertaining the financial impact of angel investors’ fame on venture capital allocation. We use a hand-collected dataset, applying Becker’s theory of discrimination to the Shark Tank simulation of the angel investment market. We use Google Trends data on angel investors as a measure of investors’ fame to test its influence on angel financing. We find that, in the context of angel capital, entrepreneurs are not inclined to pay a “celebrity premium” for more renowned backers. However, the fame of angel investors is positively associated with higher project survival rates. Additionally, excessive equity relinquishment by founding entrepreneurs is linked to lower project survival rates, highlighting the balance between funding negotiations and long-term entrepreneurial success.

Suggested Citation

  • Zhihong Shi & Elena Smirnova & Shalei Simms & Christopher Castro-Andrade, 2025. "Becker Meets Sharks: Angel Financing and Venture Performance," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 51(3), pages 340-372, June.
    • Handle: RePEc:pal:easeco:v:51:y:2025:i:3:d:10.1057_s41302-025-00299-4
    DOI: 10.1057/s41302-025-00299-4
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    Keywords

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    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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