The advantage of experienced start-up founders in venture capital acquisition: evidence from serial entrepreneurs

Entrepreneurs with prior firm-founding experience are expected to have more skills and social connections than novice entrepreneurs. Such skills and social connections could give experienced founders some advantage in the process of raising venture capital. This paper uses a large database of venture-backed companies and their founders to examine the advantage associated with prior founding experience. Compared with novice entrepreneurs, entrepreneurs with venture-backed founding experience tend to raise more venture capital at an early round of financing and tend to complete the early round much more quickly. In contrast, experienced founders whose earlier firms were not venture-backed do not show a similar advantage over novice entrepreneurs, suggesting the importance of connections with venture capitalists in the early stage of venture capital financing. However, when the analysis also takes into account later rounds of financing, all entrepreneurs with prior founding experience appear to raise more venture capital. This implies that skills acquired from any previous founding experience can make an entrepreneur perform better and in turn attract more venture capital.     

Perceived progress variability and entrepreneurial effort intensity: The moderating role of venture goal commitment

Drawing on entrepreneurial motivation and goal striving literatures, we examined the dynamic relationship between momentary perceived progress, or an ongoing sense of how one is doing in the pursuit of one's venture goal, and entrepreneurial effort intensity among early-stage entrepreneurs who are based in business incubators. We also examined how perceived progress variability over time predicted entrepreneurial effort intensity, and whether venture goal commitment moderated this link. Experience-sampling data collected from over one hundred early-stage entrepreneurs indicated that perceived progress predicted greater effort intensity. Moreover, perceived progress variability over time negatively predicted entrepreneurial effort intensity, and venture goal commitment attenuated this negative relationship. Theoretical and practical implications of our study to entrepreneurial motivation and goal striving research are discussed.     

After the cash arrives: A comparative study of venture capital and private investor involvement in entrepreneurial firms

Equity investments in entrepreneurial firms continue to grow in number and dollar amount from both venture capital and private investment sources. Increasingly, these two sources of capital play an important role in the development of new and existing entrepreneurial ventures. Due to the sometimes hurried attempt to turn their dream into reality, entrepreneurs may fail to consider similarities and differences in the value-added benefits supplied by venture capital firms (VCs) and private investors (PIs).Accordingly, the purpose of this study was to determine how initial relationships are established and maintained between entrepreneurs and their primary investors. Specifically, we asked entrepreneurs to assess characteristics of the relationship with their primary investor. We then contrasted the results between entrepreneurial firms that had received venture capital funding versus private investor funding. Differences were examined along the following lines:

• 1.• Levels of investor involvement in entrepreneurial firms
• 2.• Reporting and operational controls placed on the firm
• 3.• Types of expertise sought by the entrepreneur

     

Limited attention and the role of the venture capitalist

This research analyzes the venture capitalist's incentives to maximize the profits of the entrepreneurs of ventures and the limited partners of a venture fund. Venture capital is a professionally managed pool of capital invested in equity-linked private ventures. Entrepreneurs turn to venture capitalists for financing because high-technology startup firms have low or negative cash flows, which prevent them from borrowing or issuing equity. In addition, venture capitalists are actively involved in management of the venture to assure its success. This solves the problem of startup firms that do not have the cash flows to hire management consultants.Venture capital contracts have three main characteristics: (1) staging the commitment of capital and preserving the option to abandon, (2) using compensation systems directly linked to value creation, and (3) preserving ways to force management to distribute investment proceeds. These characteristics address three fundamental problems: (1) sorting the venture capital among the entrepreneurial ventures, (2) providing incentives to motivate venture capitalists to maximize the value of the funded ventures, and (3) providing incentives to motivate entrepreneurs to maximize the value of the ventures. Venture capitalists fund only about a dozen projects a year out of a thousand evaluated. Each project may receive several rounds of financing. Payoffs to VCs can be very high or be a complete loss.The typical venture capital (VC) firm is organized as a limited partnership, with the venture capitalists serving as general partners and the investors as limited partners. General partner VCs act as agents for the limited partners in investing their funds. VCs invest their human capital by placing their reputation on the line. The goal is to begin to convert the investment into cash or marketable securities, which are distributed to the partners. VC management companies receive a management fee equal to a percentage (usually 2.5%) of the capital of each fund. They also receive a percentage (15–30%) of the profits of each fund, called carried interest. Periodic reports are made by the VC firm to the limited partners. Usually these are only costs of managing the fund, and so revenues are negative. Most contracts specify the percentage of time that the VC will devote to managing the fund.The analysis of this research deals with the incentives of the VC who has limited attention to be allocated between improving current ventures and evaluating new ventures for possible funding. The analysis shows that the VC, as agent for both the entrepreneur and the general partners, does not have the incentives required to maximize their profits. The VC allocates attention among ventures and venture funds less frequently than required to maximize the entrepreneurs' and limited partners' profits. However, the VC does maximize the total profits of all ventures. Because the VC considers the opportunity cost of attention, the VC's allocation of attention is efficient. The implication of this result is that, although the entrepreneurs and limited partners could be made better off with a different allocation of the VC's time, this would be an inefficient use of the VC's time.     

Angels and non-angels: Are there differences?

The market for informal venture capital is an elusive and nearly invisible source of financing for entrepreneurial ventures. This market consists of a diverse set of high net worth individuals (business angels) who invest a portion of their assets in high-risk, high-return entrepreneurial ventures. The emerging consensus of the characteristics of the individual investor is that of a well-educated,middle-aged individual with considerable business experience and a substantial net worth. These informal investors appear to prefer investing in the early start-up stage of the venture and, if given a choice, prefer that their investments be located close to home. One consequence of this consensus is the tendency to assume that the traits of these business angels are as tightly clustered around the norm as are the traits of venture capital funds. They are not. In terms of their competence in the many areas of venture investing, these Individual investors range from the successful, cashed-out entrepreneur on the one hand to individuals with little or no experience with venture investing on the other. At the same time, little is known about the characteristics of high net worth individuals who never ventured where angels dare to tread, or about these non-angels' propensity to join the fold. Thus, this study seeks to fill the void by examining the characteristics of high net worth individuals regardless of their investment history or their interest in venture investing.An analysis of the data reveals three groups of high net worth Individuals: business angels with experience investing in entrepreneurial ventures, interested potential investors with no venture investment history but who express a desire to enter the venture investment market, and uninterested potential investors who under no circumstances would consider investing in entrepreneurial ventures as part of their investment strategy. Business angels and potential investors (both the interested and non-interested segment) share similar views about the economic significance of the entrepreneur and the difficulty in securing the equity capital for development of the venture. As the issues move from the general to the specific, divergence in investment attitudes takes place among the two groups, but this divergence is in terms of magnitude or intensity, rather than in contrasting or opposing views of the process. The potential investor tends to view investing in entrepreneurial ventures on a smaller scale than the active investor, especially in terms of the dollar amount committed to any one investment. While the business angel is more interested than the potential investor across all stages of financing, the interest for both groups increases as the type of financing progresses from the seed stage to expansion financing. In contrast, the potential investor is more likely to seek diversification as a motivation for venture investing than their angel counterparts.The potential investor pool is segmented into those potential investors who appear willing to take on the role of business angels and those individuals who have no desire to participate in the venture market. For the interested group to increase their interest in providing venture capital, these potential investors want assistance in monitoring the performance of the venture investment, followed by assistance in pricing and structuring. Both of these resources relate more to the technical aspects of venture investing and Indicate that these are the areas where the potential investor is least likely to have expertise. Other resources, such as finding and evaluating the investment opportunity, appear to represent less of a stimulus for the potential investor. In many respects, interested potential investors act like business angels across several dimensions. Both consider the later stages of the development of the venture as the preferred stage to invest. The business angel and interested potential investor prefer investments to be located relatively close to their primary residence and share similar views on the amount of the investment portfolio to allocate to venture investing. Where the interested potential investor and business angel clearly differ is on the scale of the commitment and the motivation for investing. The potential investor will commit a smaller dollar amount to any one venture, is more inclined to participate with other investors, and is more apt to see venture investing as a diversification strategy than is the seasoned business angel.     

Should securities regulation promote equity crowdfunding?

In this paper, we show that too strong investor protection may harm small firms and entrepreneurial initiatives, which contrasts with the traditional “law and finance” view that stronger investor protection is better. This situation is particularly relevant in equity crowdfunding, which refers to a recent financial innovation originating on the Internet that targets small and innovative firms. In many jurisdictions, securities regulation offers exemptions to prospectus and registration requirements. We provide an into-depth discussion of recent regulatory reforms in different countries and discuss how they may impact equity crowdfunding. Building on a theoretical framework, we show that optimal regulation depends on the availability of an alternative early-stage financing such as venture capital and angel finance. Finally, we offer exploratory evidence from Germany on the impact of securities regulation on small business finance.     

Passion for entrepreneurship or passion for the product? A conjoint analysis of angel and VC decision-making

Passion is important to venture investors, but what specifically do they want entrepreneurs to be passionate about? This study theorizes that angel investors and venture capitalists consider both entrepreneurs' passion for activities related to the product or service the venture provides (i.e., product passion) and passion for founding and developing new ventures (i.e., entrepreneurial passion). We demonstrate that both types of passion become more appealing when the investor perceives that the entrepreneur is highly open and receptive to feedback, suggesting that openness to feedback mitigates potential concerns associated with passion in its extremes. We further find that venture investors differ in their consideration of passion; angel investors and venture capitalists with more investing experience place greater emphasis on the combination of product passion and openness to feedback, whereas those with more entrepreneurial experience emphasize the combination of entrepreneurial passion and openness to feedback.     

A theoretical analysis of optimal financing strategies for different types of capital-constrained entrepreneurs

In this paper, we compare two alternative financing strategies that capital-constrained entrepreneurs can adopt: they can either wait until they raised enough money to complete their project (the more conservative strategy) or use limited resources to achieve some intermediate milestone before contacting large outside investors such as venture capitalists (the more adventurous strategy). We examine how the choice of financing strategy is affected by entrepreneurial types (life-style, serial and pure profit-maximizing entrepreneur). We show that specific entrepreneurial characteristics may ultimately affect the shape of firms as they may pursue different strategies to achieve similar goals. The paper generates a number of empirical predictions on security design, the interplay between angel and venture capital finance, and the professionalization of the venture capital market.     

The Deal Structuring Stage of the Venture Capitalist Decision‐Making Process: Exploring Confidence and Control*

This exploratory study examines the deal structuring stage of the venture capitalist decision‐making process. Here, the primary issues of concern are investor confidence and potential control of a venture in relation to the level of financing the investor provides and the structure with which the funding is delivered. Confidence comes in support of the entrepreneur, the venture itself, or a combination of the two, prior to capital transfer, but after the initial “invest or not invest” decision has already occurred. Findings support a multicriteria perspective of the pre‐investment decision‐making process and a distinct difference between entrepreneur confidence and venture confidence in the deal structuring stage.     

The Corridor Principle

This article discusses how many entrepreneurs create multiple ventures, and thereby apparently lengthen the duration of their entrepreneurial careers. A new concept, called the Corridor Principle, is proposed as a possible explanation of the multiple venture phenomenon. The Corridor Principle states that the mere act of starting a venture enables entrepreneurs to see other venture opportunities they could neither see nor take advantage of until they had started their initial venture.The Corridor Principle presents an alternative model to the linear single venture career model, embodied by such celebrity entrepreneurs as Ray Kroc of MacDonald' s and Kenneth Olsen of Digital Equipment Corp. Six hypotheses test expectations about the timing and duration of entrepreneurial careers, as well as the relationship between entrepreneurial career length and the creation of multiple ventures.The findings strongly support: • the position that entrepreneurship is a dynamic, multi-venture process for a great many entrepreneurs the rule, rather than the exception. • the existence of a positive correlation between finding at least a second venture and realizing a longer entrepreneurial career. Though there are a variety of explanations for this, and the patterns include both sequential and overlapping ventures, the net effect of creating multiple ventures appears to produce a longer entrepreneurial career. • the position that significant numbers of entrepreneurs create their second venture very early in their entrepreneurial careers especially when contrasted to the group of ex-entrepreneurs, who create multiple ventures (if at all) at a slower rate and later in their careers.Overall, these observations reinforce the notion of the Corridor Principle. Though who can and cannot take advantage of the Corridor Principle is not entirely revealed by the data, some indication exists that an entrepreneurs ability to use Corridor Principle strategy to prolong his or her career is related both to age at startup, and to conscious anticipation and preparation for an entrepreneurial career.The main implications for entrepreneurship practitioners, advisors, researchers, teachers and students are these: Whether studying the entrepreneurial process or planning to start an entrepreneurial career, a long-term view should be taken, one that includes the likely possibility of multiple ventures. The minimum economic returns of earlier ventures can be lower than previously thought if these ventures provide entry to subsequent ventures that possess higher (more acceptable) returns to the entrepreneur. The evidence thus far available indicates that the creation of subsequent ventures occurs relatively quickly when corridors of opportunity become visible and attainable after earlier ventures are established. The likelihood of career failure, as opposed to venture failure, may be lowered if one selects earlier ventures based on their potential to reveal follow-on-venture opportunities that the entrepreneur can investigate and possibly pursue.     

The Effect of Cognition,Institutions, and Long Term Orientation on Entrepreneurial Ethical Behavior: China vs. U.S.

This paper presents a theoretical framework to examine if entrepreneurs think and behave differently at various phases of a venture, namely opportunity exploration and exploitation stages. It is also proposed that there is a difference between entrepreneurs in China and in the U.S. due to institutional voids. Furthermore, we argue that the difference increases across the two stages of the entrepreneurial process. Specifically, at the exploration stage, entrepreneurs in China and the U.S. behave similarly when ethics is concerned. However, entrepreneurial unethical behaviors seem to be more rampant at the exploitation stage in China compared with that in the U.S. Lastly, we provide future research directions to build a stream of research.     

The paradox of new venture legitimation within an entrepreneurial ecosystem

The current rise in research on entrepreneurial ecosystems notes that many questions are still unanswered. We, therefore, theorize about a unique paradox for entrepreneurs trying to establish legitimacy for their new ventures within and beyond an entrepreneurial ecosystem; that is, when pursuing opportunities with high levels of technological or market newness, entrepreneurs confront a significant challenge in legitimizing their venture within an entrepreneurial ecosystem, while those entrepreneurs pursuing ventures using existing technologies or pursuing existing markets have a much easier path to garnering legitimacy within that ecosystem. However, the diffusion of that legitimacy beyond the ecosystem will be wider and more far-reaching for those pursuing the newer elements compared to those using existing technologies or pursuing existing markets, thus, creating a paradox of venture legitimation. Prior research outlines approaches for new venture legitimacy but it is unclear when these approaches should be applied within and beyond an entrepreneurial ecosystem. To address this paradox, we integrate ideas from the entrepreneurship and innovation literature with insights from the legitimacy literature to describe how different types of venture newness employ different legitimation strategies which results in different levels of legitimacy diffusion beyond an ecosystem. We conclude with a discussion of our concepts and offer suggestions for future research efforts.     

The informal venture capital market: Aspects of scale and market efficiency

Risk capital is a resource essential to the formation and growth of entrepreneurial ventures. In a society that is increasingly dependent upon innovation and entrepreneurship for its economic vitality, the performance of the venture capital markets is a matter of fundamental concern to entrepreneurs, venture investors and to public officials. This article deals with the informal venture capital market, the market in which entrepreneurs raise equity-type financing from private investors, (business angels). The informal venture capital market is virtually invisible and often misunderstood. It is composed of a diverse and diffuse population of individuals of means; many of whom have created their own successful ventures. There are no directories of individual venture investors and no public records of their investment transactions. Consequently, the informal venture capital market poses many unanswered questions.The author discusses two aspects of the informal venture capital market: questions of scale and market efficiency. The discussion draws upon existing research to extract and synthesize data that provide a reasonable basis for inferences about scale and efficiency.Private venture investors tend to be self-made individuals with substantial business and financial experience and with a net worth of $1 million or more. The author estimates that the number of private venture investors in the United States is at least 250,000, of whom about 100,000 are active in any given year. By providing seed capital for ventures that subsequently raise funds from professional venture investors or in the public equity markets and equity financing for privately-held firms that are growing faster than internal cash flow can support, private investors fill gaps in the institutional equity markets.The author estimates that private investors manage a portfolio of venture investments aggregating in the neighborhood of $50 billion, about twice the capital managed by professional venture investors. By participating in smaller transactions, private investors finance over five times as many entrepreneurs as professional venture investors; 20,000 or more firms per year compared to two or three thousand. The typical angel-backed venture raises about $250,000 from three or more private investors.Despite the apparent scale of the informal venture capital market, the author cites evidence that the market is relatively inefficient. It is a market characterized by limited information about investors and investment opportunities. Furthermore, many entrepreneurs and private investors are unfamiliar with the techniques of successful venture financing. The author's scale and efficiency inferences, coupled with evidence documenting gaps between private and social returns from innovation, prompt questions about public as well as private initiatives to enhance the efficiency of the informal venture capital market.The article concludes with a discussion of Venture Capital Network, Inc. (VCN), an experimental effort to enhance the efficiency of the informal venture capital market. VCN's procedures and performance are described, followed by a discussion of the lessons learned during the first two years of the experiment.     

A process model of entrepreneurial venture creation

The process model of entrepreneurial venture creation developed in this paper is based on interviews with entrepreneurs who started twenty-seven business in a range of industries in upstate New York. The venture creation process described here is an iterative, nonlinear, feedback-driven, conceptual, and physical process.The model includes internally and externally stimulated opportunity recognition, commitment to physical creation, set-up of production technology, organization creation, product creation, linking with markets, and customer feedback. For analytical convenience, the process has been divided into the opportunity stage, the technology set-up and organization-creation stage, and the exchange stage. Business concept, production technology, and product are respectively the core variables representing the three stages.Entrepreneurs introduce differing amounts of novelty at each core variable during venture creation, and the varying amounts of novelty qualitatively distinguish one kind of entrepreneurship from another.For the researcher, the model suggests a better method for specifying samples of entrepreneurial firms. It shows how studies on the context of venture creation can be more specific, and proposes that novelty at the core variables be operationalized as a step toward defining the entrepreneurial content of ventures.For the prospective entrepreneur, the model will serve as a useful road map. It will alert the entrepreneur to the strategic issues at each stage in the venture creation process, particularly when introducing significant novelty at any of the core variables.     

Entrepreneurship ecosystems and women entrepreneurs: a social capital and network approach

This study investigates the effects of venture typology, race, ethnicity, and past venture experience on the social capital distribution of women entrepreneurs in entrepreneurial ecosystems. Social network data from two municipal ecosystems in Florida, USA (Gainesville and Jacksonville), suggest that network connectivity and the distribution of social capital are significantly different for men and women entrepreneurs. This difference is contingent on the venture type. Male entrepreneurs show higher comparative scores of bridging social capital in aggressive- and managed-growth venture networks, while women entrepreneurs surpass their male counterparts’ bridging capital scores in lifestyle and survival venture networks. Lastly, experienced women entrepreneurs that self-identified as white showed a higher degree of network connectivity and bridging social capital in the entrepreneurial ecosystem than less experienced non-white female entrepreneurs. Implications for entrepreneurship practice and new research paths are discussed.

     

河南省大学生创业融资能力影响因素的实证研究

实证研究表明,创业融资政策的完善程度对大学生创业至关重要;创业团队的专业技能在创业融资中的影响具有显著相关性;创业项目市场发展潜力对创业融资具有高度相关;创业融资信息服务平台对大学生创业融资水平同样具有显著正相关。提高大学生创业融资能力,必须不断加强创业教育,优化创业团队专业知识结构;合理评估创业项目,提升项目市场发展潜力;创造良好融资环境,完善大学生创业融资政策;提供全方位的服务,构建创业融资服务平台。     

Entrepreneurial risk-taking in crowdfunding campaigns

This paper examines how different sources of risk in reward-based crowdfunding campaigns influence the entrepreneur’s choice of targeted crowdfunding goal. This form of crowdfunding helps entrepreneurs to obtain feedback on market demand (next to raising money), since the pre-purchase decision of the crowd generates useful public information about product demand. However, it may also lead to project discontinuation if not enough money is raised during the campaign. We therefore derive conditions under which the entrepreneur sets a higher target. At other times, this leads entrepreneurs to raise sometimes even more money than necessary when there is a risk that the idea is quickly replicated by others, leading to even larger campaigns but also to fewer projects offered on platforms. Conversely, the increased presence of professional investors (business angels, venture capitalists) on platforms reduces the entrepreneurs’ incentives in their crowdfunding campaign, which leads to more but on average smaller crowdfunding campaigns.     

Venture tales: Practical storytelling strategies underpinning entrepreneurial narratives

Narratives help entrepreneurs and potential venture supporters to make sense of new ventures and to frame entrepreneurial journeys. Despite current understanding of how narratives shape entrepreneurial outcomes, however, there is limited guidance about how entrepreneurs might craft their own narratives in practice. In this article, we identify six types of entrepreneurial narratives—(1) an identity narrative, (2) an opportunity narrative, (3) a projective narrative, (4) a failure narrative, (5) a pivot narrative, and (6) a resourcefulness narrative—and we detail practical storytelling strategies entrepreneurs can use to shape each of these narrative types. We then propose that entrepreneurs can combine, sequence, and revise these narratives as the entrepreneurial journey unfolds. Knowledge of how to strategically manage the full entrepreneurial narrative repertoire enables entrepreneurs to create meaning and value where there once was none and to capture that value over time as a venture grows.     

Legal issues in new venture development

During 1986, approximately 270 early-stage entrepreneurs sought informotion on almost 1,000 legal issues from the Small Business Student (Legal) Clinic, a program run by the New Venture Development Group at The University of Calgary.Using a combination of legal file information and survey data from 100 of these clients, the authors looked at three central questions: 1. Whether entrepreneurial clients were able to identify legal issues affecting their business, and if so, to what extent? 2. Whether stage of venture development was related to the legal problems identified, and 3. Whether failure to identify legal issues affected subsequent business development.Data from the client surveys was used to determine whether clients were made aware of new legal issues and to assess client follow-through behavior; in particular, whether the clients altered or abandoned their business strategy as a result of receiving new information to determine whether these results varied according to stage of venture development. Client files were placed in four broad categories: concept only, prototype development and business planning, pre-selling and financing, and early operation.The data revealed that new venture clients underestimate the amount of legal support they will require at the early stages of venture development. Ninety-one percent (91%) of clients asked clinic personnel to provide information on one or more additional legal issues of importance to their venture. Client files also indicated that while most clients were able to identify and respond to a perceived need to protect personal property, few were able to identify the myriad of other regulatory controls and legislation which would directly impact on their business venture.Failure to understand relevant legal issues resulted in 44% of all clients altering or abandoning their original business strategy when new legal information was received—many clients in the early operational stages. An assessment of the costs associated with these changes was not made. However, the authors discuss the likely costs incurred by entrepreneurs in a number of common situations.The data also revealed the dominance of certain legal issues at various stages of venture development and suggested some logic for an ordering in the legal priorities of newly developed business.The authors conclude: • University based legal assistance clinics can help entrepreneurs identify legal issues that might otherwise go undetected. • The most common legal issues identified by entrepreneurs were related to the protection of personal assets and business ideas. • Different legal problems tend to dominate at different stages of venture development. • Many clients alter or abandon their original business strategy after receiving new information.     

Early-stage business model experimentation and pivoting

Recent literature suggests entrepreneurs struggle to pivot—or fundamentally change aspects of their venture—due to identity-based resistance to change. Yet, when entrepreneurs receive negative feedback, overcoming this resistance may be important to pivoting their business model. We adopt a convergent, mixed methods research design to explore when and why some entrepreneurs overcome resistance to change in response to negative feedback during early-stage business model experimentation. Building upon qualitative data that we gathered and analyzed, we theorize entrepreneurs may resist pivoting their value proposition relative to other business model components despite receiving negative feedback on this aspect of their business model. However, we find three factors – entrepreneurial experience, startup mentoring, and team size – may enable entrepreneurs to pivot in response to negative feedback. We theorize that these factors broaden a startup team's perspective, enabling value proposition pivoting during early-stage business model experimentation. We test these relationships with quantitative data from 80 startups engaged in business model experimentation and find support across hypotheses. We contribute to understanding when and why entrepreneurs pivot aspects of their business models in response to negative feedback during early-stage business model experimentation.Executive summaryThe entrepreneurship literature suggests startups may benefit from experimentation and pivoting different parts of their business model in response to negative feedback from stakeholders (Andries et al., 2021; Camuffo et al., 2020; Shepherd and Gruber, 2021). In early stages of starting a new venture, a business model refers to a cognitive schema or belief about an activity system that could potentially create and capture value (Massa et al., 2017; Shepherd and Gruber, 2021). Business model experimentation is the process of testing assumptions underlying this potential business model and pivoting business model assumptions in response to negative feedback (Andries et al., 2013; McDonald and Eisenhardt, 2020; Leatherbee and Katila, 2020). Building upon prior literature, we define business model pivoting as a fundamental change to parts of the business model (Berends et al., 2021; Snihur and Clarysse, 2022; Shepherd and Gruber, 2021). Yet, literature also suggests founders often struggle to pivot assumptions despite negative feedback. Motives to preserve and protect certain assumptions relevant to founders' identities can interfere with pivoting (Grimes, 2018; Kirtley and O'Mahony, 2023; Zuzul and Tripsas, 2020). Despite the general understanding that founders struggle to change their ideas, however, the entrepreneurship literature currently lacks precise insight into when and why founders can overcome resistance to pivoting.In this research, we explore when and why startups pivot different parts of their business model. We do so within the context of early-stage business model experimentation, where founders explicitly state assumptions about different parts of their potential business model, test those assumptions against stakeholder feedback, and are encouraged to pivot business model components in response to negative feedback. Through a mixed methods research design, we find (1) founders tend to resist pivoting their value propositions relative to other parts of a business model in response to negative feedback; and (2) entrepreneurial experience, startup mentoring, and team size enables startups to overcome this resistance to pivoting in response to negative feedback. We theorize these factors broaden founders' perspectives (Warshay, 1962), contributing to a greater willingness to pivot during experimentation.We contribute to the literature on entrepreneurial pivoting by explaining nuanced variation in pivoting distinct business model components during experimentation. This contribution is important because it reveals that resistance to pivoting the business model may be more complex than previously thought. We also contribute to the literature at the nexus of business model experimentation and entrepreneurial cognition by finding that entrepreneurial experience, startup mentoring, and team size enable startups to pivot despite psychological resistance to pivoting in response to negative feedback because it broadens founders' perspectives. This insight is important theoretically because it advances what we know about enabling experimenting with business models under conditions of uncertainty. The research presented here has clear and important implications for practice. This research suggests founders often resist changing the value proposition versus other components of their business models in early stages of venture development. This resistance can impede experimentation and pivoting in response to negative feedback. To the extent founders want to broaden their perspective to enable pivoting their value propositions in response to negative feedback during early stages of venture development, our data suggest they may be able to do so by recruiting members with entrepreneurial experience on their team (or gain entrepreneurial experience themselves), engage frequently with startup mentors, and increase the size of their team. Overall, we view the breath of perspective that comes from experience and interactions with others as an advantage for entrepreneurs when experimenting with their business models during early stages of venture development.