Veni vidi VC- decision making (heuristics and bias) in Venture Capital Fonds and business angels

Key Info

Basic Information

Lehrstuhl für Wirtschaftswissenschaften für Ingenieure und Naturwissenschaftler
Bachelor; Master


95% of startups fail meaning that they do not achieve the profits they've promised to their investors and 30-40% even go bankrupt within the first 10 years (Ghosh, 2012). Therefore, the decision in which startups to invest is the most crucial part of being a venture capital investor or business angel.

There is a big dispute in academia whether people should make such decision based heuristics (= rules of thumb) or not. Some researchers (e.g. Tverksy & Kahneman, 2013) believe that people make irrational decisions when they use simplistic rules of thumb and systemically deviate from optimal or rational decisions ("biases"). Others, such as Gerd Gigerenzener (e.g., 2008) believe that under certain conditions, such heuristics lead to better decisions than thoughtful deliberation.

This thesis aims to investigate these two fundamentally different beliefs in the venture capital and business angel context. Possible specific questions could be.:
- Do VC investors / business angels show less loss aversion?
- Are VC investors / business angels less subject to base rate fallacy?
- Do VC investors / business angels use the delta heuristic?
- …

An excerpt of your most important tasks during the master thesis:
- Develop and detail the research question
- Independent literature research
- If necessary, data collection and statistical analysis
- Discussion of the results

What's in it for you?
- Exciting topic in the field of psychology and management
- Close supervision and individual coaching with a psychologist

Literature for initial reading:
- Gigerenzer, G. (2008). Why heuristics work. Perspectives on psychological science, 3(1), 20-29.
- Kahneman, D., & Tversky, A. (2013). Prospect theory: An analysis of decision under risk. In Handbook of the fundamentals of financial decision making: Part I (pp. 99-127).

Keywords: Decision making, prospect theory, heuristics, biases, venture capital, business angel