Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/318856 
Year of Publication: 
2024
Citation: 
[Journal:] Journal of Business Economics [ISSN:] 1861-8928 [Volume:] 95 [Issue:] 1 [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2024 [Pages:] 37-74
Publisher: 
Springer, Berlin, Heidelberg
Abstract: 
The high-risk decision environment and information asymmetries associated with investing in early-stage startups in pitch competitions make angel investors prone to biased decision-making. Drawing from social perception theory, this study examines how angel investors' decisions are influenced by observed personal characteristics of entrepreneurial teams, based on representative stereotypes. Analyzing a dataset of N  = 553 startup pitches from the German televised competition Die Höhle der Löwen , this study reveals that the likelihood of securing deals with German angel investors and the resulting business valuations are linked to certain superficial team characteristics. Specifically, the age, diverse ethnicity, and physical attractiveness of the entrepreneurial team have a significant positive effect on deal probabilities. Moreover, angel investors offer lower deal valuations to teams of older and female entrepreneurs, suggesting the presence of a systematic bias. These insights contribute to understanding the role of stereotypes in entrepreneurial finance and address the challenges related to bias in access to capital for early-stage startups in Germany.
Subjects: 
Age bias
Gender bias
Ethnicity bias
Attractiveness bias
Stereotypes
Angel investors
JEL: 
D81
D91
E71
G41
L26
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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