Prediction and Control Under Uncertainty: Outcomes in Angel Investing


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.

Journal or Publication:
while those who emphasize non- predictive control experience a reduction in investment failures without a reduction in their number of successes.
Authors:
Saras Sarasvathy
Stuart Read
Nick Dew
Rob Wiltbank
Tags:
Status:
publish
Year Published
2009
Relevant Principles:
Pilot-in-the-Plane (Control vs. Predict)
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