Work

Following in the Footsteps of Others: Social Proof in Angel Groups

Year: 2025

Type: article

Abstract: This study develops a theory of social proof in angel investing. We propose that availability bias leads angel group members to copy the highly visible decisions of new investors evaluating the same opportunity ( external social proof) and overlook the more insightful reinvestment decisions of prior investors ( internal social proof). We also theorize that more experienced investors generally herd less but selectively imitate knowledgeable investors from prior rounds. A study of investments by 469 angel group members and a vignette experiment with 367 participants support our hypotheses. Our findings contribute to research on social proof, decision-making under uncertainty, and investment experience.

Source: Entrepreneurship Theory and Practice

DOI: 10.1177/10422587251315657

Authors: Henrik Wesemann Lekkas, Torben Antretter, Dean Shepherd, Joakim Wincent

Institutions: University of St.Gallen, University of Notre Dame, University of Helsinki, Hanken School of Economics

Language: English

Topic: Private Equity and Venture Capital

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,900

OpenAlex ID: W4407809396

FWCI: 29.59

Cites: 130

Cited by: 11

Related to: 10