What do Early-Stage Investors Value More in Decision-Making? Horse vs Jockey Debate: A Meta-Analytic Review

There is a long-standing scientific debate on whether opportunity is more important than the entrepreneur or vice versa (horse vs jockey). These are the decision-making criteria used by early-stage investors (business angels and venture capitalists) when assessing whether to invest in a new venture. The two are catch-all terms for many additional criteria such as experience, capabilities, and skills - in relation to the entrepreneur; and market, finance, and product - in relation to opportunity. Almost two dozen (k =20) empirical studies have painted a mixed picture as to which of the two sets of criteria is more important. We performed a meta-analytic review of this issue using the single point estimate method with moderators such as decision-making phase, industry, investor type, and regional characteristics. The analysis was conducted on twenty-two samples from twenty empirical studies involving 1,324 respondents and reported mean and standard deviation values, converted into percent of maximum possible scores (POMP). We found that entrepreneur was considered more important 64.83; CI [54.41; 75.24] than the opportunity M = 57.73; CI [46.71; 68.76], with small but significant differences. The moderators had a strong influence and, given the relatively small number of studies, there was high variance in the results. Our findings show that future research should concentrate on a moderator-based approach to ascertain the circumstances under which the entrepreneur is more important than opportunity in the assessment process.