Studying New Venture Ideas using an Online Funding Platform

Abstract

Venture ideas in the entrepreneurship process have been studied as a micro-level construct and have been defined in multiple ways in literature. However, previous reviews indicate a lack of studies on the qualities of opportunities or venture ideas and of empirical evidence regarding their effects on entrepreneurial process outcomes. To address this issue, the current study attempts to validate five characteristics of the new venture ideas construct (Davidsson, 2015) towards the outcome variable of the decision to invest or not. The study utilises 80 new venture ideas (projects) from the online funding website. A group of five entrepreneurs rated these ideas independently on novelty, appropriability, diffusability, scalability, and scope, using a 5-point Likert scale ranging from "1 = not at all" to "5 = extremely". A comparison of the results from regression analysis by the judges and the backers on the funding platform suggested that the characteristic of appropriability was the most important factor in determining the final investment decision. Empirical support for the definition and characteristics of new venture ideas and the validity of appropriability as a significant indicator of the investment decision are the main contributions of this study. The findings of this study will be helpful to both entrepreneurs and investors alike in the future.

Digital Startups Survivor and Scalability: Identifying Variables for Accelerated Growth

“…For the "scalable business model" dimension, the following scalable characteristics of startups were attributed: having an innovative and differentiated value proposition (Ruggieri et al, 2018), that is difficult to replicate (Kunte & Promsiri, 2019) and is worth scaling (Bosch et al, 2013) to offer a service according to the needs of the target audience (Venkobarao, 2019). In addition, the business model must have long-term objectives (Kuratko et al, 2019;Venkobarao, 2019).…”

“…The business model must be clearly defined, with its target audience and how to reach it, to avoid chaos when scaling (Venkobarao, 2019). According to Ruggieri et al (2018), a Scalable Business Model must be innovative in terms of value proposition and should have achievable and long-term Open Journal of Business and Management goals (Kuratko et al, 2019;Venkobarao, 2019), while having a proposition that is difficult to imitate (Kunte & Promsiri, 2019). Bosch et al (2013) stated that a startup's challenge is to find a service idea worth scaling and must submit it to the "build-measure-learn" test cycle recommended by the lean startup method (Ries, 2011).…”