Two-Stage Expert and Senior Investor Evaluation Mechanism

In Simple Words

Picture a national talent competition where regional judges filter thousands of audition tapes down to a top tier, who then perform directly in front of major record label executives for actual contracts.

Research question

Evaluating early-stage business ideas across thousands of entrepreneurs requires multi-tiered vetting by local ecosystem professionals and senior venture capitalists to align project quality with funding feasibility.

Participants

N = 4,958 total entrepreneurs across 49 African countries; 15 African professional evaluators in Stage 1; 24 senior investors (VCs and angels) in Stage 2.

Study Design

Two-stage evaluation design. Stage 1 scored submitted proposals on a 1–5 scale. Stage 2 evaluated top-graded proposals (444 from Stage 1 plus 164 from Bocconi PhD panel = 608 total, 454 evaluated by investors) for funding interest.

Results

93 proposals moved to concrete investor follow-up, with up to 30 proposals funded or actively followed up by November 2018. Treatment effects on reaching Stage 2 were positive and significant for Face-to-Face ($\beta = 0.079, p < 0.10$) and Virtual-Within ($\beta = 0.026, p < 0.05$ in Large Countries), but conditional on reaching Stage 2, investor quality scores showed no differential treatment effect ($\beta = -0.081, p > 0.10$), indicating strong alignment between stage-1 ecosystem ratings and stage-2 investor criteria.

Takeaway

Implement a two-tier evaluation framework using local ecosystem experts to filter business plans before presenting top-tier proposals to senior venture capitalists for funding consideration.

Related findings

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• Baseline Practice Prevalence as Persistence Predictor →Firms & operations

  Think of teaching sports techniques to a beginner; a student is far more likely to permanently retain basic fundamental drills that everyone in the league uses than obscure, hyper-complex tactical plays that nobody else in their town practices.

• Cadence-Matched Payout Architecture →Firms & operations

  Just as a garden watering system is programmed to sprinkle water precisely when soil moisture drops rather than on a fixed calendar date once a month, payroll structures should deliver funds at the exact moments household expenditures or debt settlements fall due.

• Owner Time-Constraint Bottleneck via Centralized Decision-Making →Firms & operations

  Think of a growing restaurant where the master chef insists on signing off on every $25 purchase of vegetables; as the business attempts to open new locations, kitchen equipment breaks down and growth halts because every decision stalls waiting for the master chef's personal sign-off.