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Guangfeng Tian

DBA Graduate - 2020

Thesis title

What makes an entrepreneur team stand out in the process of investment evaluation? The effects of leadership, personality, and experience

Supervisor(s)

Yu Xiubao
Purpose: Entrepreneurship is a critical driver of both economic growth and technological progress. Venture capital seeks to invest the most promising projects and hope to obtain huge investment return in the further. Start-ups are striving to external funding as venture investment helps them expand business. However, venture investment is viewed as a risky behavior as most of the start-ups failed. Therefore, it is of great importance of investigate what contribute an entrepreneur team stand out in the process of investment evaluation. Drawing on the renowned big-five personality theory and literature on leadership style, experience, and passion, the current study attempt to investigate how the personality, experience, and passion of the entrepreneur teams influence the investment likelihood of their projects. Design/methodology/approach: An empirical survey with multiple sources was adopted to test the proposed hypotheses. Specifically, entrepreneurial team leaders were surveyed to self-rate their personality, experience, and commitment towards the projects. Team members were surveyed to evaluate the leadership styles of their leaders. Two venture capitalists were surveyed to rate the investment likelihood towards respective entrepreneur projects. The questionnaires were developed using existing scales wherever possible. Using a convenience sampling strategy, I collected data from 140 entrepreneurial teams in Shanghai. Findings: Thirteen hypotheses were proposed and nine of which were supported by the data. One hypothesis was marginally supported. I find that both conscientiousness and extraversion are positively associated with investment likelihood. Neuroticism was found to negatively predict investment likelihood. The effects of openness and agreeableness on investment likelihood were not significant. Task-oriented leadership and relational-oriented leadership both positively affect investment likelihood. The influence of change-oriented leadership on investment likelihood was not significant. I found that working experience and entrepreneurship experience are positively associated with investment likelihood. Both passion and commitment are found to positively predict investment likelihood. Moreover, I also found that commitment strengthen the positive relationship between passion and investment likelihood. Research limitations/implications: The data of this paper was collected from a single venture capital firm. The criterions of investment decision may vary with firm types. Third, the model was validated using a single-responded survey. Given the cross-sectional nature of the data, the results of this paper were suffered from causality and reverse causality. Practical implications: My results have practical implications for both the venture capitalists and the entrepreneurs. The findings offer suggestions to entrepreneurs regarding how to stand out in the process of investment evaluation. The findings also inform venture capitalists to select the most promising entrepreneurial projects in a more efficient way. Keywords: investment likelihood, working experience, entrepreneur experience, passion, leadership styles, big-five personality