Subjective assessment by entrepreneurs and venture financing for startup enterprises

An entrepreneurpsilas assessment of his entrepreneurial project and the investor is a major factor that influences the venture financing for the startup enterprise. We build a decision making model for venture financing with the entrepreneur as the central decision maker and provide a theoretical analysis of the main factors that influence the venture financing of the startup enterprise and the operating mechanisms of such factors. The results of the analysis show that: (1) The higher the entrepreneur rates the project quality, the more venture capital he is willing to attract; however, this tendency will gradually weaken. (2) In the entrepreneurpsilas mind there might exist a ldquocritical pointrdquo with regard to the judgment of probability: if the entrepreneurpsilas assessed probability of success for the entrepreneurial project exceeds the critical point, his rating of the probability of success is positively correlated to the amount of venture capital that he is willing to introduce. (3) The more investorpsilas non-monetary resources as perceived by the entrepreneur, the less venture capital the entrepreneur would be willing to introduce; however, this tendency will gradually weaken. (4) The greater gap between the investorspsila and the entrepreneurspsila assessments of the startup enterprise, the less venture capital the entrepreneur would be willing to absorb.