Knowledge that Transforms

While external funding is indispensable for most entrepreneurs to scale their ventures, entrepreneurship literature highlights the additional benefits of investors' continued involvement, such as access to their expertise and network. Angel investors, whose primary value-add often emerges through their relationship with the entrepreneurs, generate particularly pronounced benefits. Entrepreneurship research has established that bringing angel investors on board comes at the cost of relinquishing partial equity, which restricts entrepreneurs' control over their ventures; however, the individual-level consequences of funding for entrepreneurs remain largely unexplored. To address this gap, we study how angels' funding and their post-investment involvement in the venture affect entrepreneurs' eudaimonic well-being in the long term. Drawing on self-determination theory, we explore further how the psychological need for autonomy, competence, and relatedness mediates the relationship between angel funding and entrepreneurs' well-being. Self-determination theory states that individuals' verbalized language reflects their needs; accordingly, we use Linguistic Inquiry and Word Count (LIWC) analysis on a unique dataset of almost 125 million words derived from the tweets of 1667 entrepreneurs on X (formerly Twitter). As hypothesized, we find a positive association between angel funding and entrepreneurs' well-being. Autonomy negatively mediates this relationship, while competence and relatedness mediate it positively. We advance research on entrepreneurs' eudaimonic well-being and extend the literature on self-determination theory and individual-level consequences of angel funding. Entrepreneurs often face a difficult trade-off: They must decide whether to accept funding from angel investors or relinquish some control over their venture. While much research centers on the business implications of this trade-off (Davila et al., 2003; Politis, 2008), the personal impact on entrepreneurs' eudaimonic well-being remains underexplored (Collewaert and Sapienza, 2016). This knowledge gap is concerning because entrepreneurs' well-being closely relates to their ventures' performance (Stephan et al., 2020b; Wach et al., 2016). Recent calls for research (Stephan et al., 2023) emphasize the need to understand how external factors, like investor involvement, affect entrepreneurs' well-being by influencing the extent to which their psychological needs for autonomy, competence, and relatedness are satisfied, as outlined by self-determination theory (SDT) ( Deci and Ryan, 1985 , 2000). Despite the recognized importance of these factors, the impact of angel investors, who often form close relationships with entrepreneurs and engage deeply in their ventures (Fairchild, 2011; Politis, 2008), has been largely overlooked. Our study addresses this gap by examining how angel funding and subsequent involvement influence entrepreneurs' eudaimonic long-term well-being. Using a dataset of 125 million words compiled from 1667 entrepreneurs' tweets on Twitter (now X) from 2006 to 2022, we apply Linguistic Inquiry and Word Count (LIWC) analysis to gain insights into the psychological states of these entrepreneurs (Block et al., 2019; Obschonka et al., 2017). This approach aligns with SDT, which posits that psychological needs fulfillment manifests in communication (Vansteenkiste et al., 2020). Our findings reveal that angel investor involvement can significantly influence entrepreneurs' eudaimonic well-being—positively and negatively—by affecting entrepreneurs' psychological needs fulfillment. Our study thus complements research on entrepreneurs' well-being with longitudinal insights. First, it extends the literature on entrepreneurial well-being by providing a nuanced understanding of how angel funding and involvement, mediated by autonomy, competence, and relatedness, affect entrepreneurs' well-being over time (Stephan et al., 2023). Second, our study contributes to SDT literature by contextualizing investor involvement as an external factor and using large-scale social media data to assess entrepreneurs' psychological needs (Stephan et al., 2020a). Third, our study highlights the importance of the dynamics between angel investors and entrepreneurs, showing that such relationships significantly shape entrepreneurs' personal outcomes (Collewaert and Sapienza, 2016; Politis, 2008). Beyond academic contributions, our study offers practical insights for entrepreneurs, angel investors, policy-makers, and universities by emphasizing the importance of understanding and managing the entrepreneurs' personal impacts of bringing angel investors on board. • Investigates long-term consequences of angel funding for entrepreneurs' well-being. • Uses longitudinal Twitter data captured before, during, and after angel funding. • Draws on computerized text analysis to assess psychological needs and well-being. • Results show a positive link between angel funding and entrepreneurs' long-term well-being. • Autonomy (negatively) and competence and relatedness (positively) mediate this link.

This paper introduces the concept of meaningful venturing, which refers to entrepreneurial action that generates a sense of meaning in life for the entrepreneur. Although entrepreneurs have considerable freedom to create meaning in life through their venturing, they appear to struggle to do so. To address this tension, we theorize about how entrepreneurs can generate meaningful venturing and the tradeoffs that may arise during this process. The emerging framework of meaningful venturing offers four pathways based on differences in nascent entrepreneurs’ motivation and knowledge. For each pathway, we explain the tradeoffs that the focal entrepreneur is most likely to experience between the three facets of meaning in life. We then explain how each entrepreneur might resolve these tradeoffs to generate fully-meaningful venturing by taking specific schema-enhancing action that would be less effective for the other entrepreneurs. Overall, the framework contributes to the entrepreneurship literature by providing new insights into how meaningful venturing manifests, why entrepreneurs exploring the same opportunity may experience different tradeoffs, and how different entrepreneurs might generate fully-meaningful venturing. Additionally, we offer possibilities for future research at the intersection of meaningful venturing, and the literatures on entrepreneurial identity, well-being, and passion. Executive summary Because entrepreneurship provides founders with the freedom to enact their personal vision, entrepreneurs have high potential to generate meaning in life for themselves through their venturing. However, they often struggle to do so. We introduce the concept of meaningful venturing to encompass entrepreneurial action that generates a sense of meaning in life for the entrepreneur. To theorize about how entrepreneurs generate meaning in life, we integrate the psychology literature on meaning in life with the entrepreneurship literature, emphasizing how entrepreneurial action theory (McMullen and Shepherd, 2006) can be a helpful theoretical lens for examining meaningful venturing. We develop a framework of meaningful venturing that contains four pathways based on nascent entrepreneurs' initial motivation and knowledge and the entrepreneurial action they engage in to reduce perceived uncertainty. Each pathway contains different tradeoffs between the three formative facets of meaning in life — a sense of purpose, mattering, and comprehension. These tradeoffs suggest unique ways for each entrepreneur to generate fully-meaningful venturing that would not be effective for the other entrepreneurs. Overall, the framework of meaningful venturing contributes to the entrepreneurship literature by providing new insights into how meaningful venturing manifests, what causes it, and how it can progress for different entrepreneurs. To expand the theoretical relevance of the meaningful venturing concept, we discuss the potential to integrate meaningful venturing with established literatures in entrepreneurship on identity, well-being, and passion. Through this research agenda, we highlight how meaningful venturing could offer exciting possibilities for entrepreneurship scholarship.

Raising money from family and friends is a common form of startup funding. However, we know little about how accepting funds from these individuals influences an entrepreneur's risk-taking preferences. We theorize that as an entrepreneur's relationship with an investor strengthens, the entrepreneur is more likely to anticipate guilt that could emerge from a potential venture failure, which prompts the entrepreneur to make more conservative venture growth decisions. We test our model using a quasi-experimental vignette-based approach. Based on the results, we argue that the tendency for an entrepreneur to become more risk averse in their entrepreneurial decision making due to feelings of anticipated guilt after receiving funding from strong ties demonstrates a funding-source-induced bias.

Effectuation is a key theory of entrepreneurial decision-making. However, measuring effectuation remains challenging. Existing measures use self-report scales that rely on recall and aggregate across diverse past situations. Such measures cannot capture effectuation as a decision-making logic based on heuristics. Leveraging insights from extant work on situational judgment tests (SJT) in applied psychology, we develop and validate an effectuation SJT that captures the implicit nature of entrepreneurs' use of effectuation in specific situations. Across seven studies including a 14-month prospective panel study, we establish the construct, predictive and incremental validity of the new SJT for venture outcomes. Methodologically, this novel SJT of effectuation facilitates new types of research, such as unpacking the cognitive underpinnings of effectuation. Theoretically, our study offers new conceptual clarity about effectual principles and their impacts on venture outcomes by leveraging extant work on heuristics in the cognitive sciences. We also introduce SJTs as a new method of value to specific streams of entrepreneurship research.

In the emerging literature on venture boards, little research examines the association between different categories of venture directors and strategic firm outcomes. We conduct an empirical inquiry into how founder-directors, venture capitalist investor-directors and corporate venture investor-directors are related to inter-organizational alliances, innovation, and exits. In our longitudinal study based on hand-collected data on 156 medical device ventures in the US, we find that founder-directors are positively associated with patents and negatively associated with supply chain agreements. VC-directors are positively associated with exits but are negatively associated with R&D, supply chain agreements and patents. CVC-directors are negatively associated with patents and first product introductions. Adopting an abductive approach, we suggest potential mechanisms based on interviews with venture directors and CEOs and suggest future directions for venture boards scholarship. Scandals at private firms such as Theranos and Uber (when it was private) have highlighted both the influence that boards of directors have on these firms and the relative opacity with which they operate. While there is a considerable literature, both theoretical and empirical, on the boards of public companies, there is a relative paucity of research on governance in private firms. At the same time, the distinctive features of private firm governance may limit the applicability of insights from public boards; one difference is that in venture boards, directors often have significant ownership stakes in the companies as founders and representatives of venture capital firms (VCs) or the investment arms of other corporations (CVCs). As part of this special issue on the boards of private firms, we undertake an empirical investigation of the impact that these types of directors have on a variety of firm outcomes. We build on research on venture investing which hints at, but does not disentangle, the distinct impact of investors that have board seats versus investors that do not. Our analyses explores the impact that three types of venture directors- Founder-directors, VC-directors and CVC directors- have on strategic firm outcomes they are likely to influence in our context: inter-organizational ties, innovation and exit events. We conduct our study within a sector of the US medical device industry, where both venture-directors and venture-investors are prevalent and where previous research indicates they are likely to impact ventures. We take an abductive approach to analyze hand-collected longitudinal data on the directors of ventures and on the firms in this industry between 1997 and 2018. Overall, the results suggest that different types of directors can be significantly associated with ventures strategic outcomes, with each type of director bringing their unique focus and expertise to the table. For example, the results indicate that founder-directors may focus more on technology development and less on commercial development. For CVC-directors we do not find a significant association with interorganizational tie formation or exits, but are significantly negatively associated with innovation outcomes. Finally, while VC-directors are negatively associated with some kinds of interorganizational ties and patenting, they are significantly positively associated with faster exits via acquisitions and IPOs. We contribute to the emerging literature on venture boards through an abductive inquiry into how different types of venture directors are associated with some of the most important strategic outcomes involved in the growth, development and exits of ventures. These results control for investor and investment characteristics. The empirical relationships we document suggest a multitude of theoretical explanations that future researchers can build on to test hypotheses. Some of our surprising findings may have implications for key governance theories and their relevance to venture boards. For example, our results suggest that the agency perspective may be applicable to ventures through the principal-principal model but due to conflicts among different VC-directors, not among VC-directors and CVC-directors. By contrast, the resource dependence perspective can be extended by considering the relevance of organizational roles of resource providers as directors versus investors (e.g., CVC directors are neither particularly effective at providing complementary resources nor notably "shark-like" in misappropriating ventures) and that ventures may face significant coordination costs in orchestrating resources from different directors. Overall, our study suggests a more nuanced picture of conflict and cooperation in venture boards than has previously been identified and offers an opportunity for scholars to explore a broad array of theoretical explanations, including power and conflict.

This study draws on the behavioral agency model to investigate how stock options incentivize CEO risk-taking related to investments in external clean technology (cleantech) ventures. Using longitudinal data from 540 publicly traded firms, we find that current option wealth is negatively associated with corporate cleantech investments while prospective option wealth is positively associated. The results show that founder CEOs, who exhibit different endowment and risk-bearing patterns than hired CEOs, do not perceive cleantech investments as mixed gambles. These findings advance understanding of the interplay between equity-based incentives, CEO characteristics, and incumbents' pursuit of sustainable business practices.

This paper explores the long-run gender origins of entrepreneurship. We argue that present-day propensity for entrepreneurship among men will be higher in neighbourhoods which had historically high sex ratios. We propose that high sex ratios generate attitudes and behaviours that imprint into cultural norms about gender roles and that transmission within families, at school and via shared remembrance create hysteresis in the evolution of these gender norms. To empirically test the theory, we employ the transport of convicts to the British colonies of New South Wales and Van Diemen's Land in the eighteenth and nineteenth centuries as a natural experiment to examine the long-run effect of cultural norms about gender roles on entrepreneurship in present-day Australia. We use a representative longitudinal dataset for the Australian population that provides information on the neighbourhood in which the participant lives, which we merge with data on the sex ratio in historical counties from the mid-nineteenth century. We find that men who live in neighbourhoods that had high historical sex ratios have a higher propensity for entrepreneurship. We present evidence consistent with transmission of cultural norms within families and schools, as well as via shared remembrance in neighbourhoods that had high historical sex ratios being likely persistence mechanisms. • Provide evidence on the historical origins of gender disparities in entrepreneurship • Historical sex ratios explain present-day spatial patterns in male entrepreneurship. • Historical sex ratios imprint cultural norms about gender roles. • Cultural norms are transmitted via family, school and shared remembrance.

Drawing from neo-institutional theory, we examine how entrepreneurs' disclosure of leisure activities influences the performance of their crowdfunding campaigns. We propose that entrepreneurs' disclosure of leisure activities in their campaigns negatively impacts crowdfunding performance because an institutional norm exists pressuring early-stage entrepreneurs to conform to workaholism. Using a sample of 8511 Kickstarter campaigns and a randomized experiment (n = 436), we find evidence that entrepreneurs who disclose leisure activities are viewed as less workaholic. This, in turn, hurts backers' perceptions of the entrepreneurs' legitimacy, leading to lower crowdfunding performance. We also find women backers are more tolerant of entrepreneurs disclosing their leisure activities than men.

This study presents a novel measure of the overlap between a Corporate Venture Capital (CVC) investor and an entrepreneurial firm in the product, market, and technology spaces. Using this measure, we present an alternative parallel framework to understand an incumbent's decision to invest in or acquire a startup, grounded in the boundaries of the firm theory. The CVC's distinct features regarding property rights and incomplete contracting are preferred when the overlap is low. Also, CVC investments spur the greatest ex-post change in firm scope when the startup has moderate (vs. low or high) overlap with the corporate investor.

We develop a novel power-centric model that examines antecedents and boundary conditions for independent directors in venture boards. Using 989 U.S. biotech and pharmaceutical ventures from 2010 to 2020, we find that the structural power gap between inside directors and VC directors is negatively associated with venture board independence. We also find that VC directors' intra-group conflict through tenure variance would weaken the impact of VC directors' power over inside directors on venture board independence, while VC ownership power through investment would strengthen it. These results offer a deeper theoretical understanding of venture boards. The role of independent directors on venture boards—privately owned, professionally funded firms—remains underexplored in academic literature. While independent directors in public firms are primarily tasked with monitoring executives and protecting shareholders, their role in ventures is less defined. In VC-backed ventures, CEOs are often aligned with the firm's goals, and major shareholders have direct representation on the board through venture capitalist (VC) directors. The traditional agency problem, which necessitates independent directors in public firms, is absent in this context. Yet, independent directors make up about 20 % of venture boards, prompting a key question: Why do VC-backed ventures include independent directors? This paper develops a power-based theoretical model to explain the inclusion of independent directors on venture boards. Based on organizational power theory, board seats represent structural power, with inside directors (e.g., the CEO and key executives) and VC directors as the dominant groups. These groups often have divergent priorities—VC directors emphasize short-term financial returns, while inside directors focus on long-term growth and innovation. When power is imbalanced, the dominant group resists the addition of independent directors. However, when the power gap between the two groups is smaller, conflict and stalemates become more likely, creating a need for independent directors to mediate and restore board functionality. The paper also identifies two critical contingencies that shape this dynamic. The first is the intra-group power dynamics among VC directors. High tenure variance within the VC group reduces cohesion and alignment, weakening their collective power. This diminished unity increases the likelihood of independent directors being added to balance competing interests. The second contingency is the external investors' influence: Greater VC investment aligns VC directors more closely with external investors, amplifying their collective power relative to inside directors. This increased power advantage reduces the perceived need for independent directors. The study's findings, based on an analysis of 989 U.S. biotech and pharmaceutical ventures from 2010 to 2020, provide strong empirical support for this model. By highlighting the power-balancing role of independent directors, the paper offers a new political perspective on venture board composition. For practitioners, these insights underscore the strategic value of independent directors in fostering effective governance, especially in ventures where power dynamics between inside and VC directors are finely balanced. Entrepreneurs can proactively leverage independent directors to mitigate conflicts and improve board decision-making. For VCs, recognizing how intra-group dynamics and investment levels influence governance structures can help shape more effective board strategies. To conclude, by answering the question of why ventures include independent directors, this paper not only advances governance theory but also provides actionable guidance for practitioners navigating the complexities of venture boards. • We draw on the power perspective to explore the antecedents and boundary conditions of venture board independence. • Structural power gap between inside directors and VC directors is negatively associated with venture board independence. • VC directors' tenure variance weakens the impact of VC directors' power over inside directors on venture board independence. • VC investment strengthens the impact of VC directors' power over inside directors on venture board independence.