Investor Evaluation of Entrepreneurial Failure (Zunino et al. 2022) | FT50 AMJ VSSER25

#VSSER25 #session5

🎙️ Welcome to Revise and Resubmit — the podcast that turns high-impact academic research into bite-sized brilliance for your commute, your coffee break, or your midnight inspiration session 🚀📚

Today, we’re cracking open a question as old as Silicon Valley itself and as sharp as a VC’s pitch deck:
🔥 Does failure doom you... or can you rise again with skill on your side?

Let’s rewind and replay with a powerhouse paper titled:
🎯 “How Do Investors Evaluate Past Entrepreneurial Failure? Unpacking Failure Due to Lack of Skill versus Bad Luck”
🧠 Authored by the brilliant trio — Diego Zunino, Gary Dushnitsky, and Mirjam van Praag — and published in none other than the Academy of Management Journal, one of the most prestigious, FT50-listed journals in the academic universe 🏆🌍

Now here’s the twist:
We often think success is proof of genius, and failure is the scarlet letter.
But what if it’s not that simple? 🤨

📉 Most ventures fail. That’s the reality.
But failure has layers — it can be bad luck (a recession, a supplier disappearing overnight)
…or it can be bad judgment (a poorly timed launch, a product no one needed).

The authors dove into the minds of investors using clever equity crowdfunding experiments to find out:
💰 Do investors throw out entrepreneurs with a past failure — no questions asked?
Or... 🧠 do they rationally infer that someone who shows real skill might just deserve another shot?

And guess what?
The study shows that most investors don’t just flinch at failure — they weigh it, decode it, and look for signals of competence. In other words: Failure isn't fatal. Skill can still shine through. 🌟

So now, let’s leave you with one powerful question to chew on:
🔍 When an entrepreneur stumbles and falls… do we see the fall — or do we see the way they get back up?

🙏 A huge shoutout to Zunino, Dushnitsky, and van Praag for this game-changing insight, and to the Academy of Management for publishing it in a true FT50 giant of a journal.

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Reference

Zunino, D., Dushnitsky, G., & van Praag, M. (2022). How Do Investors Evaluate Past Entrepreneurial Failure? Unpacking Failure Due to Lack of Skill versus Bad Luck. Academy of Management Journal, 65(4). https://doi.org/10.5465/amj.2018.0579

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