Attractiveness, ethnicity, and stage financing: exploring heuristics in venture capital staging

Figures & data

Table 1. Means and standard deviations.

Variable		Mean	SD
1.	Avg. time interval (log)	5.756	0.907
2.	Attractiveness lead	4.005	0.978
3.	Co-ethnicity	0.476	0.501
4.	Attractiveness team	3.657	0.947
5.	Firm age	616.42	476.914
6.	Team size	2.54	1.139
7.	Avg. firm growth	17.120	28.332
8.	B2B dummy	0.597	0.492
9.	Number of rounds	3.26	0.776
10.	Entrepreneurial experience	8.835	11.289
11.	Entrepreneur’s self-esteem	4.048	1.231
12.	VC experience	19.668	25.921
13.	Number of VCs	5.81	5.593
14.	Educational diversity (level)	0.347	0.436
15.	Educational diversity (type)	0.415	0.446
16.	Educational similarity	0.684	0.466
17.	Lead entrepreneur gender	0.960	0.194
18.	Gender similarity	0.917	0.276
19.	Amount of funding (log)	15.435	1.202
20.	Location dummy	0.609	0.489
21.	Geographic distance	6.752	2.368
22.	Photo quality lead	4.415	0.533
23.	Photo quality team	4.351	0.542

Table 2. Correlations.

		1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23
1	Avg. time interval (log)	1
2	Attractiveness lead	0.144	1
3	Co-ethnicity	0.118	−0.036	1
4	Attractiveness team	−0.13	0.438	0.109	1
5	Firm age	0.239	−0.068	−0.089	−0.136	1
6	Team size	0.021	−0.052	0.044	−0.001	−0.046	1
7	Average firm growth	−0.049	−0.026	0.039	−0.014	0.12	0.069	1
8	B2B dummy	0.106	−0.017	−0.244	−0.087	−0.011	−0.047	−0.12	1
9	Number of rounds	−0.031	−0.085	−0.029	−0.085	0.15	0.097	0.56	−0.147	1
10	Entrepreneurial experience	−0.014	−0.129	0.086	−0.147	0.037	0.225	0.063	−0.089	0.13	1
11	Entrepreneur’s self-esteem	0.115	0.53	0.003	0.26	−0.028	−0.022	0.02	0.014	0.027	−0.034	1
12	VC experience	−0.095	−0.012	−0.075	−0.046	0.119	−0.025	0.073	−0.001	0.005	0.077	−0.032	1
13	Number of VCs	−0.109	0.019	−0.054	−0.034	0.009	0.102	0.188	−0.06	0.301	0.028	0.054	0.543	1
14	Educational diversity (level)	−0.023	0.123	−0.003	−0.017	0.035	0.097	−0.001	0.084	−0.058	−0.018	0.091	−0.041	−0.063	1
15	Educational diversity (type)	0.124	0.049	−0.039	−0.064	0.077	0.209	−0.042	−0.026	−0.096	−0.06	0.091	0.006	0.071	0.11	1
16	Educational similarity	−0.013	−0.081	0.033	−0.076	0.004	0.036	0.056	−0.186	0.048	0.044	−0.04	0.017	0.108	−0.013	0.174	1
17	Lead entrepreneur gender	0.003	−0.122	0.014	−0.131	−0.058	0.076	0.05	−0.075	0.039	0.052	−0.129	−0.036	−0.059	−0.028	0.046	0.151	1
18	Gender similarity	0.055	−0.086	0.034	−0.124	0.006	0.101	0.003	0.011	0.019	0.081	−0.076	0.051	−0.044	−0.043	0.121	0.135	0.672	1
19	Amount of funding (log)	−0.029	−0.063	−0.041	−0.034	0.204	0.179	0.55	−0.124	0.481	0.21	−0.004	0.039	0.256	−0.05	−0.049	0.089	0.052	−0.011	1
20	Location dummy	−0.091	0.107	0.072	0.184	−0.133	−0.012	−0.069	−0.006	0.028	−0.228	0.08	0.083	0.225	0.009	−0.224	−0.221	−0.116	−0.111	0.068	1
21	Geographic distance	0.006	−0.112	−0.073	−0.119	0.137	−0.049	0.117	0	0.223	0.066	−0.042	0.225	0.335	−0.203	−0.106	−0.083	−0.086	−0.081	0.183	0.082	1
22	Photo quality lead	0.051	−0.067	−0.002	0.017	0.014	0.115	−0.011	0.025	−0.063	−0.098	−0.01	−0.018	0.028	−0.03	−0.004	−0.023	0.009	0.036	0.05	0.142	−0.104	1
23	Photo quality team	−0.007	0.023	0.041	0.166	0.067	0.057	−0.05	−0.007	−0.045	−0.064	0.024	−0.04	0.022	−0.001	0.07	−0.044	0.004	−0.023	−0.09	0.129	0.019	0.438	1

N = 231. Correlations of .130 or higher (positive or negative) are significant at P < 0.05.

Table 3. Results of OLS regression for average time between investment rounds.

	Model 1				Model 2					Model 3
Variable	B	S.E.	Beta	Sig.	B	S.E.	Beta	Sig.	B	S.E.	Beta	Sig.
Constant	4.560	1.571		**	3.846	1.540		*	2.857	1.598		†
Attractiveness team	−0.123	0.096	−0.112		−0.216	0.098	−0.197	*	−0.223	0.097	−0.202	*
Firm age at round 1	0.000	0.000	0.170	†	0.000	0.000	0.168	†	0.000	0.000	0.150	*
Team size	0.066	0.071	0.079		0.070	0.069	0.084		0.067	0.068	0.081
Average firm growth	−0.001	0.004	−0.029		0.000	0.003	0.002		0.000	0.003	−0.011
B2B dummy	0.424	0.175	0.219	*	0.454	0.170	0.235	**	0.480	0.169	0.248	**
Number of rounds	0.020	0.136	−0.018		0.017	0.132	−0.014		0.028	0.130	−0.025
Entrepreneurial experience	0.000	0.010	−0.001		0.005	0.010	0.042		0.005	0.010	0.050
Entrepreneur self-esteem	0.115	0.060	0.152	†	0.019	0.066	0.025		0.022	0.065	0.029
VC experience	−0.004	0.004	−0.088		−0.005	0.004	−0.114		−0.005	0.004	−0.112
Number of VCs	−0.012	0.017	−0.074		−0.013	0.017	−0.083		−0.013	0.017	−0.083
Educational diversity (level)	−0.185	0.175	−0.082		−0.237	0.171	−0.105		−0.212	0.169	−0.094
Educational diversity (type)	0.494	0.190	0.227	*	0.524	0.185	0.240	**	0.506	0.183	0.232	**
Educational similarity	−0.056	0.169	−0.027		−0.021	0.164	−0.010		−0.044	0.163	−0.021
Lead entrepreneur gender	0.411	0.604	0.065		0.462	0.586	0.073		0.404	0.580	0.064
Gender similarity	0.018	0.376	0.005		−0.006	0.364	−0.002		0.082	0.363	0.022
Amount of funding	−0.015	0.084	−0.020		−0.017	0.081	−0.023		0.002	0.081	0.002
Location dummy	−0.077	0.180	−0.040		−0.068	0.175	−0.035		−0.068	0.173	−0.035
Geographic distance	0.016	0.037	0.038		0.026	0.036	0.062		0.021	0.036	0.050
Photo quality lead	0.283	0.183	0.157		0.295	0.178	0.164	†	0.250	0.177	0.139
Photo quality team	−0.265	0.212	−0.128		−0.267	0.205	−0.129		−0.212	0.204	−0.102
Year dummies	−0.365	0.174	−0.191	*	−0.345	0.168	−0.180	*	−0.312	0.167	−0.163	†
Sub-industry dummies	Yes	Yes	Yes		Yes	Yes	Yes		Yes	Yes	Yes
Attractiveness lead					.297	0.094	0.286	**	0.452	0.121	0.436	***
Co-ethnicity					.456	0.160	0.239	**	0.466	0.158	0.244	**
Attractiveness lead x Co-ethnicity									−0.315	0.154	−0.213	*
R^2			.284				.332				.352
Adjusted R^2			.110				.163				.183
F			1.632	*			1.970	**			2.078	**
N			231				231				231

Two-tailed tests. Unstandardized (B) and standardised (Beta) coefficients are reported.

† P < 0.10; * P < 0.05; ** P < 0.01; *** P < 0.001.

Figure 1. Moderating effect of ethnicity on the average time between investment rounds.

Table 4. Results of 2SLS analysis.

Panel A: First-stage regression for physical attractiveness			Panel B: Second-stage regression for average time between investment rounds
Variable	Standardised Beta Coefficients		Variable	Standardised Beta Coefficients
Constant	3.374	*	Constant	3.884	*
Pattern hair loss	−0.344	***	Attractiveness team	−0.334	*
Attractiveness team	0.249	**	Firm age at round 1	0.223	†
Firm age at round 1	0.001		Team size	0.082
Team size	−0.057		Average firm growth	0.031
Average firm growth	0.030		B2B dummy	0.216	*
B2B dummy	−0.079		Number of rounds	0.010
Number of rounds	−0.073		Entrepreneurial experience	0.108
Entrepreneurial experience	−0.092		Entrepreneur self-esteem	−0.260
Entrepreneur self-esteem	0.385	***	VC experience	0.126
VC experience	0.075		Number of VCs	−0.089
Number of VCs	0.098		Educational diversity (level)	−0.141	†
Educational diversity (level)	0.092		Educational diversity (type)	0.238	**
Educational diversity (type)	−0.050		Educational similarity	0.019
Educational similarity	−0.037		Lead entrepreneur gender	0.121
Lead entrepreneur gender	−0.029		Gender similarity	0.012
Gender similarity	0.037		Amount of funding	−0.070
Amount of funding	−0.004		Location dummy	−0.041
Location dummy	−0.066		Geographic distance	0.058
Geographic distance	−0.025		Photo quality lead	0.248	*
Photo quality lead	−0.007		Photo quality team	−0.166
Photo quality team	0.028		Year dummies	Yes
Year dummies	Yes		Sub-industry dummies	Yes
Sub-industry dummies	Yes		Co-ethnicity	0.256	**
Co-ethnicity	−0.078		Attractiveness lead	0.597	**
R^2	0.489		R^2	0.299
N	231		N	231

Two-tailed tests. Standardised coefficients are reported.

† P < .01; * P < 0.05; ** P < 0.01; *** P < 0.001.

Table 5. Estimated coefficients from the Heckman selection model for average time between investment rounds.

	Model 1			Model 2
Variable	B	S.E.	Sig.	B	S.E.	Sig.
Constant	4.369	1.775	*	5.178	1.993	**
Attractiveness team	−0.227	0.108	*	−0.223	0.095	*
Firm age at round 1	0.000	0.000		0.000	0.000
Team size	0.061	0.070		0.073	0.062
Average firm growth	−0.000	0.003		−0.000	0.003
B2B dummy	0.413	0.176	*	0.390	0.155	*
Number of rounds	0.032	0.133		0.065	0.120
Entrepreneurial experience	0.007	0.010		0.005	0.009
Entrepreneur self-esteem	−0.128	0.116		−0.107	0.103
VC experience	−0.005	0.004		−0.005	0.003
Number of VCs	−0.012	0.017		−0.013	0.015
Educational diversity (level)	−0.225	0.175		−0.279	0.158
Educational diversity (type)	0.467	0.186	*	0.431	0.165	**
Educational similarity	−0.039	0.166		−0.039	0.145
Lead entrepreneur gender	0.408	0.586		0.345	0.514
Gender similarity	0.147	0.371		0.193	0.327
Amount of funding	−0.030	0.084		−0.139	0.106
Location dummy	−0.064	0.178		−0.106	0.158
Geographic distance	0.019	0.037		0.015	0.032
Photo quality lead	0.342	0.187		0.324	0.164	*
Photo quality team	−0.248	0.216		−0.227	0.190
Year dummies	Yes			Yes
Sub-industry dummies	Yes			Yes
Co-ethnicity	0.430	0.165	*	0.444	0.145	**
Attractiveness lead	0.518	0.133	***	0.510	0.117	***
Attractiveness lead x Co-ethnicity	−0.325	0.164	*	−0.308	0.144	*
R^2	.343
Adjusted R^2	.162
F	1.890
Observations	506			506
Censored observations				231
Uncensored observations				275
Inverted Mills Ratio				−.361
Wald chi2 (35)				87.97