How venture capital funding changes an entrepreneur’s digital identity: more self-confidence and professionalism but less authenticity!

in Review of Managerial Science (in press)

An entrepreneur’s digital identity matters for resource acquisition and venture development. However, we know little about the factors that influence or change entrepreneurs’ digital identities. This ... [more ▼]

An entrepreneur’s digital identity matters for resource acquisition and venture development. However, we know little about the factors that influence or change entrepreneurs’ digital identities. This study explores how entrepreneurs’ digital identities change after a venture capital (VC) funding round. Applying a language-based text analysis to a large sample of tweets from 2,094 US entrepreneurs, we analyze entrepreneurs’ digital identities before and after VC funding. The results of our analysis show that VC funding can impact the entrepreneur’s digital identity in both a positive and a negative way. On the positive side, entrepreneurs increasingly use language indicative of higher self-confidence, positive emotions, and increased professionalism. On the negative side, we find that the entrepreneur’s digital identity loses its authenticity, particularly with high funding amounts raised. The latter can be problematic as authenticity is shown to be a critical resource that entrepreneurs possess to build legitimacy and engage stakeholders in their venture. Our study contributes to research on the consequences of VC funding for entrepreneurs as well as to research on entrepreneurial digital identities. Practical implications exist for entrepreneurs managing their entrepreneurial identities over the course of venture development. [less ▲]

VC investors’ venture screening: the role of the decision maker’s education and experience

in Journal of Business Economics (2022), 92(1), 27-63

We assess whether and how VC investors’ education and experience influence their screening decisions of potential investee candidates. Empirically, we perform an experimental choice-based-conjoint (CBC ... [more ▼]

We assess whether and how VC investors’ education and experience influence their screening decisions of potential investee candidates. Empirically, we perform an experimental choice-based-conjoint (CBC) analysis with 564 individual VC investors. Our results highlight that the level and field of education, as well as the decision maker’s investment and entrepreneurial experience, moderate the relative importance of different screening criteria. More specifically, we find that international scalability seems to become more important for decision makers with higher education and those with entrepreneurial experience. Whereas decision makers with a background in natural science focus on the value-added of the product or service, engineers seem to value a break even profitability and focus less on the management team. Investment experience, on the other hand, leads to a stronger focus on the management team. Our study contributes to the literature investigating the influence of human capital characteristics of the decision maker in venture financing. Practical implications exist for entrepreneurial ventures seeking financing and for risk capital investors making investments in such ventures. [less ▲]