A Theory of Investor Gut Feel: A Test of the Impact of Gut Feel on Entrepreneurial Investment Decisions

This dissertation found support for the existence and influence of gut feel in innovation-based, high-tech investment decisions. As a result of three studies using multiple research approaches, it was found that gut feel is a judgment that is made about the entrepreneur, and that experienced angel investors overwhelmingly rely on gut feel, with gut feel about the entrepreneur adding to, and also compensating for, their assessments of the business viability data about the opportunity. These studies collectively show that angel investors state that their gut feel is composed of positive perceptions of an entrepreneur's trustworthiness, commitment, passion, articulateness, and likeability, as well as negative perceptions of an entrepreneur's arrogance, being unrealistic, being unfocused, and sloppy. Hypothesized relationships between third-party positive gut feel judgments and real investments made in entrepreneurial projects at actual pitch competitions, as well as third-party negative gut feel judgments and real investments made in entrepreneurs at actual pitch competitions, were supported. However, it was found that attributions of commitment, articulateness, and likeability may be the only relevant categories in positive gut feel judgments, with an entrepreneur being 44.12 times more likely to receive funding if they are judged to be committed, 8 times more likely to receive funding if they are judged to be articulate, and 7 times more likely to receive funding if they are judged to be likeable. Sloppiness may be the only relevant category in negative gut-feel judgments, with an entrepreneur having a mere .4 times of receiving funding if they are judged to be sloppy.;Taken together, these research findings suggest distinguishing between gut feel and business viability data as separate considerations in making a funding decision. These studies provide a conceptual framework for understanding the determinants of angel investment decisions, in a way that should prove meaningful to decision making research, theories of early-stage investor decisions, and attribution and selection theories. Theoretical implications, as well as practical implications, of these three studies are discussed.