Fundable Evidence: How Financing Legibility Shapes Entrepreneurial Search

Ankur Chavda
Additional contact information
Ankur Chavda: HEC Paris - Strategy & Business Policy

No 1633, HEC Research Papers Series from HEC Paris

Abstract: This paper develops a theory of how continuation-based financing shapes entrepreneurial search by influencing which experiments entrepreneurs choose to run. Ventures dependent on external financing often need to produce evidence that is legible to investors before they can act on what they learn. Financing systems therefore do not merely evaluate entrepreneurial progress; they shape the search portfolio from which evidence arises. I theorize a venture's search portfolio as the allocation of scarce experimental resources across experiments that differ in diagnostic value and financing legibility. Continuation-based financing can pull entrepreneurs toward experiments whose outputs are easier to observe and verify, even when less legible experiments would better resolve the strategic uncertainty facing the venture.

Keywords: Entrepreneurial Finance; Bayesian; Learning; Experimentation; Entrepreneurship (search for similar items in EconPapers)
JEL-codes: L26 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2026-05-27, Revised 2026-05-28
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6782220 Full text (text/html)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1633

DOI: 10.2139/ssrn.6782220

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 1 Rue de la Libération, 78350 Jouy-en-Josas, France. Contact information at EDIRC.
Bibliographic data for series maintained by David Melon ().