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

Warnick, B. J., Murnieks, C. Y., McMullen, J. S., & Brooks, W. T. (2018). Journal of Business Venturing, 33(3), 315-332.


Topics: Entrepreneurship, Funding

Year: 2018

Country: United States

The present study aims to analyse the relationship between entrepreneurs’ passion and the funding decisions. They demonstrate that both product and entrepreneurial passion are important and become “more appealing when the investor perceives that the entrepreneur is receptive to feedback”, thus protecting against concerns of excessiveness generally attributed to passion. 

Key takeaway: Entrepreneurs can alleviate the concerns associated with passion (potential rigidities) and become more appealing to investors by being open and receptive to feedback. 


The importance of entrepreneurs’ passion in the funding decision process of angel investors (individuals who invest their personal finances into a startup) and venture capitalists (a group of professional investors whose capital come from individuals, corporations or funds) has been established, but the mechanism behind this relationship has not been studied. The present study argues that 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) are taken into account by investors. Furthermore, they hypothesize that there is a positive relationship between the investor’s probability of investment and their perceptions of both passions, and with the entrepreneur’s openness to feedback, and that this positive relation will depend on the investors’ entrepreneurial and investing experience. 


To test their hypotheses, the authors conduct an experiment on a sample of 31 angel investors and 31 venture capitalists presented with 16 hypothetical entrepreneur profiles which amounts to a total of 992 data points. They use a hierarchical linear model where the dependent variable is the investor’s “probability of investment for each opportunity”, based on five entrepreneur characteristics (“entrepreneurial passion, product passion, openness to feedback, startup and domain experience”). Data is collected on the investors’ entrepreneurial experience and years of investing to explain the differences in their decision-making. 


The results demonstrate that both types of passion are important to investors and become more appealing when the entrepreneur is perceived to be open and receptive to feedback, protecting against the concerns attributed to passion. They further find that investing and entrepreneurial investing experience explains the differences in consideration of passion. While angel and venture investors with more investing experience will place more importance on “the combination of product passion and openness to feedback, those with more entrepreneurial experience emphasize the combination of entrepreneurial passion and openness to feedback”.

One of the limitations of the study is the sample size that may lack sufficient power. Furthermore, the mechanisms by which the attributes are perceived are not examined in the paper, which opens up a new avenue for future research. 

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