Experimentation, Planning, and Structure in Early-Stage Ventures: Evidence from Venture Pitches

We examine the role of experimentation, planning, and structure in the evaluation of early-stage ventures. We hypothesize that the choice of coherent combinations – experimentation and informal structure or planning and formal structure – is associated with positive evaluations. First, using proprietary data from a venture competition, we find a positive correlation between coherent combinations and evaluations. Next, we verify the causality of this pattern through an experimental study on Amazon Mechanical Turk and find consistent results. Both in the field and the experiment, the effect is driven by evaluators with entrepreneurial experience. Overall, the evidence suggests that evaluators are sensitive to the choices of strategy and structure in early-stage ventures, contrary to the common belief that these features play little role in these organizations.