Experimentation, planning, and structure in early-stage ventures: Evidence from pitch decks

Research Summary An important strategic choice for early-stage ventures is about how to learn about the market. This choice often translates into focusing on either experimentation or planning. These strategies are best supported by different structures. Hence, the fit between strategy and structure should be considered by stakeholders evaluating the venture. We hypothesize that communicating coherent combinations-experimentation and informal structure or planning and formal structure-is positively associated with evaluation and that evaluators with entrepreneurial experience are more sensitive to this coherent choice. We test this argument combining data from a university-based venture competition and an online experiment. We find a robust positive correlation between coherent choice and evaluation. We find no clear evidence that this pattern is driven by evaluators with entrepreneurial experience. Managerial Summary The Lean Startup suggests that entrepreneurs should rely on experimentation rather than the more traditional planning approach. However, the value of experimentation might depend on the structure the venture adopts. We ask whether the fit between strategy and structure plays a role in the context of venture evaluation. We analyze data from a university-based venture competition and an online experiment. We find evidence that ventures communicating coherent choices-experimentation and informal structure or planning and formal structure-tend to be evaluated better than those communicating alternative choices. However, contrary to our expectation, this pattern does not appear to be driven by evaluators with entrepreneurial experience.