|Title||Business angel early stage decision making|
|Year of Publication||2011|
|Authors||Maxwell, AL, Jeffrey, SA, Levesque, M|
|Type||CEMI Executive Summary Series|
|Keywords||business angels, decision making, elimination-by-aspects, qualitative analysis|
Maxwell, A. L., Jeffrey, S.A. and Lévesque, M. (2011). "Business angel early stage decision making." Journal of Business Venturing 26(2): 212-225.
Using 150 interactions between entrepreneurs and potential investors, we study early stage business angel decision making. We show that contrary to the majority of past research that suggests they should, angel investors do not use a fully compensatory decision model wherein they weight and score a large number of attributes. Rather, they use a shortcut decisionmaking heuristic known as elimination-by-aspects to reduce the available investment opportunities to a more manageable size. If an opportunity is diagnosed with a fatal flaw, it is rejected in the first stage of the decisionmaking process, but all opportunities with no fatal flaws do progress beyond that stage.
Implications for Managers: