The next Entrepreneurship and Innovation Policy Research virtual seminar is Wednesday, November 15, from 11:00-12:00 ET. Natasha Overmeyer (University of Oregon) - will present "Selling Snake Oil and Unicorns: Performative Standardization in the Evaluation of Early-Stage Venture Ideas". Temitope Oladimeji (University of Massachussetts - Amherst) will discuss. Click HERE to register for the 11/15 seminar (abstract is below). We hope you join us.
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- Tim Folta (UCONN), Maryann Feldman (ASU), and Supradeep Dutta (Rutgers U)
Abstract: How do venture capital and angel investors evaluate entrepreneurial ideas in their earliest stages? Drawing on three sources of data-an ethnographic study of an annual pitch competition in Silicon Valley, archival data from this competition, and interviews with early-stage investors-this paper inductively examines how structural and temporal constraints within the startup funding ecosystem set the stage for a heretofore unexamined evaluation process. This paper introduces this process-performative standardization-as involving the collaborative construction of an idea's value by investors and entrepreneurs, followed by the assessment of this constructed value according to widely-shared investor standards. Paradoxically, the findings indicate that investors both acknowledge an idea's quantified value to be subjective and unknowable, yet place weight on it when making evaluative decisions. Leveraging the competition's archival data to analyze the consequences of performative standardization, results reveal how entrepreneurs adapt their pitches-specifically, the financial projections detailing an idea's value in the future-to align with investor expectations. Moreover, the results find that investors evaluate ideas more positively when pitches include aspects of performative standardization that meet their widely-shared standards. The findings together underscore the significance of performative standardization as a cultural process that serves not only to assess ideas at the point of evaluation, but also to coordinate and align stakeholders on a common trajectory toward actualizing an idea into a successful venture.
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