The regrets of losing a great company to invest in may or may not last long. But that doesn’t mean the loss doesn’t hurt. According to research by Ramana Nanda and Matthew Rhodes-Korpf, there are three factors affecting the finance that pours in for an entrepreneurial venture — differences in the costs of experimentation, informal culture at institutions, shocks to availability of capital. It was proven that as the cost of experimentation falls, the investments become “long shot bets” and investments made by crowds of investors in these projects are going to be more likely to fail.
Source: Social Science Research Network
Title: Financing Entrepreneurial Experimentation