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Here comes the sun: the impact of incidental contextual factors on entrepreneurial resource acquisition


Academy of Management Journal


Strategy and Entrepreneurship

Authors / Editors

Dushnitsky G;Sarkar S


Publication Year



This paper focuses on investment decisions in nascent, seed-stage startups, where information is scarce and uncertainty is intense. The entrepreneurship literature shows investment is a function of the investor-startup pair; some studies investigate startup characteristics, while others focus on investor traits. We complement extant work by studying factors beyond the investor-startup pair; namely, incidental contextual factors such as changes in the physical environment. Drawing on affect-as-information theory, we conjecture that, in the face of intense uncertainty, sunnier days may affect investors’ mood and result in a greater likelihood of investment. Archival and experimental analyses inform our predictions. The former utilizes proprietary data on 1,335 startups graduating from European accelerators. Every accelerator holds a Demo Day, where startups pitch to investors. We find that graduating on a ‘sunnier’ day increases the likelihood of investment. The ‘sunnier’ effect is stronger under intense uncertainty, where startups (a) are nascent, or (b) the founders have limited human-capital. An experimental study where prospective investors evaluate a Demo Day pitch yields further insights. Not only do we find a positive sunshine-investment association, but also document the association is mediated by investors’ mood. Our findings complement extant work and contribute to the understanding of seed-stage investment decisions.


Entrepreneurship; Financing of new ventures; Entrepreneurship; Research Methods; Research Design

Available on ECCH


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