Investing in people, not in products: how age, gender, ethnicity, and attractiveness of entrepreneurial teams influence the decision-making of angel investors in Germany

Livia Boerner (), Thomas Fritz and Bernd Frick
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Livia Boerner: Paderborn University
Thomas Fritz: Aachen University of Applied Sciences
Bernd Frick: Paderborn University

Journal of Business Economics, 2025, vol. 95, issue 1, No 3, 37-74

Abstract: Abstract The high-risk decision environment and information asymmetries associated with investing in early-stage startups in pitch competitions make angel investors prone to biased decision-making. Drawing from social perception theory, this study examines how angel investors’ decisions are influenced by observed personal characteristics of entrepreneurial teams, based on representative stereotypes. Analyzing a dataset of N = 553 startup pitches from the German televised competition Die Höhle der Löwen, this study reveals that the likelihood of securing deals with German angel investors and the resulting business valuations are linked to certain superficial team characteristics. Specifically, the age, diverse ethnicity, and physical attractiveness of the entrepreneurial team have a significant positive effect on deal probabilities. Moreover, angel investors offer lower deal valuations to teams of older and female entrepreneurs, suggesting the presence of a systematic bias. These insights contribute to understanding the role of stereotypes in entrepreneurial finance and address the challenges related to bias in access to capital for early-stage startups in Germany.

Keywords: Age bias; Gender bias; Ethnicity bias; Attractiveness bias; Stereotypes; Angel investors (search for similar items in EconPapers)
JEL-codes: D81 D91 E71 G41 L26 (search for similar items in EconPapers)
Date: 2025
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11573-024-01206-7

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