Investor Characteristics and Startups Decision

Last registered on October 12, 2023
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Pre-Trial

Trial Information

General Information

Title
Investor Characteristics and Startups Decision
RCT ID
AEARCTR-0007973
Initial registration date
September 20, 2021

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
September 20, 2021, 6:10 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
October 12, 2023, 6:51 PM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
United States of America
Region

Primary Investigator

Name
Ye Zhang
Affiliation
Columbia University
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Other Primary Investigator(s)

PI Name
Weijie Zhong
PI Affiliation
Stanford Graduate School of Business
Contact Investigator
PI Name
Junlong Feng
PI Affiliation
Hong Kong University of Science and Technology
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Additional Trial Information

Status
Completed
Start date
2021-10-31
End date
2022-08-31
Keywords
Behavior, Finance & Microfinance, Gender, Lab, Labor, Other
Additional Keywords
Entrepreneurship, Venture Capital, Discrimination, Sustainable Finance
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This study uses a field experiment to study the discrimination and sustainable finance issues in the US venture capital industry.
External Link(s)

Registration Citation

Citation
Feng, Junlong, Ye Zhang and Weijie Zhong. 2023. "Investor Characteristics and Startups Decision." AEA RCT Registry. October 12. https://doi.org/10.1257/rct.7973-1.4
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
Intervention (Hidden)
Attracting great startups is considered to be crucial to the success of a venture capital (VC) fund's performance. This paper investigates how different investor-level characteristics and fund-level organizational characteristics causally impact startup founders collaboration preferences to venture capitalists using the incentivized resume rating experimental method. Given the importance of different investor characteristics, we aim to answer the following three research questions.
a. Are U.S. startup founders biased against female and Asian venture capitalists?
b. Are impact VC funds aiming for ESG criteria more attractive to startup founders?
c.1 What other investor-level human capital characteristics (i.e., educational background, etc) and fund-level organizational capital characteristics causally impact VC's attractiveness to startup founders?
c.2 What are the relative importance of these characteristics?

Through eliciting startup founders' preferences for various venture capitalists, this project completes a field experimental system with Zhang 2021, which provide empirical insights for explaining several unique equilibrium phenomenon in the entrepreneurial finance literature. For example, why is the gender gap more persistent in the entrepreneurial community? Also, why is the VC fund performance also more persistent compared with other financial assets?

Detailed Experimental Design is provided in the attached "pre-registration plan.pdf".

When implicit discrimination is discovered, we also plan to replicate the study by recruiting founders from the Crunchbase platform. This recruitment approach offers the advantage of allowing researchers to collect comprehensive background information on experimental participants. Hence, it enables us to check whether subjects' implicit discrimination behaviors have stronger correlations with startups' real-world fundraising decisions. Moreover, we are curious about whether providing more information about investors makes it harder to detect discrimination in the IRR experimental method. This additional information on investors could potentially dilute participants' focus on investors' gender and race, thus influencing the accuracy of discrimination detection and reducing the experimental power.

Intervention Start Date
2022-01-01
Intervention End Date
2022-03-31

Primary Outcomes

Primary Outcomes (end points)
We have four co-primary outcome variables, which are the four designed evaluation questions. The most important primary outcome variable is startup founders' contact interest ratings.
Details are provided in the attached "pre-registration plan.pdf".
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
We also record the time spent on evaluating each investor profile in order to test founders' implicit bias based on gender, race or investors' ESG-related characteristics. Therefore, the evaluation time (measured in milliseconds) also serves as the outcome variable.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Details are provided in the attached "pre-registration plan.pdf".
Experimental Design Details
Details are provided in the attached "pre-registration plan.pdf".
Randomization Method
Details are provided in the attached "pre-registration plan.pdf".
Randomization Unit
Details are provided in the attached "pre-registration plan.pdf".
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
1000 startup founders
Sample size: planned number of observations
20,000 observations
Sample size (or number of clusters) by treatment arms
N/A
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Columbia University IRB
IRB Approval Date
2020-01-24
IRB Approval Number
Protocol 8362
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials