Abstract

Investment in a startup is a function of three main factors that influence each other: the entrepreneurs, the investors, and the nature of the venture, hereinafter called the EIV nexus. This study seeks to unpack the EIV nexus by analyzing and explaining (i) how entrepreneurs pitch their new ventures; (ii) how investors structure and negotiate deals; and (iii) what venture attributes and value propositions attract and detract investor engagement. Questions about the EIV nexus remain unanswered because access to real-time deal making is rare as many deal negotiations take place behind closed doors. We crafted a proprietary dataset from actual dealmaking and investment events which measures the EIV nexus. Specifically, we use video data from the popular American TV show Shark Tank, where each episode features pitches by aspiring entrepreneurs. Investors (“sharks”) listen to entrepreneurs’ pitch, ask deep-probing questions to evaluate startups’ commercial potential, and if worthy, invest their own funds into startups.

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