Yes today, no tomorrow: Exploration of deal cancellations in televised pitch competitions

Early-stage entrepreneurs exert significant efforts to secure deals with angel investors during televised startup pitch competitions. However, a substantial number of these deals are cancelled during the subsequent due diligence process. Drawing upon interpersonal persuasion theory and information asymmetries in the pitch context, we investigate deal cancellations as instances of biased communication and strategic misrepresentation. Analyzing a novel dataset comprising N = 1,334 pitches from the British format Dragons’ Den and the German format Die Höhle der Löwen, we explore the occurrence and determinants of deal cancellations. Our examination delves into differences related to gender and team size of the involved parties, pitch format, and the level of financial risk. Our findings reveal a bias against female investors, higher cancellation rates for more costly deals and a significant country effect. This work sheds light on the usually opaque due diligence processes and interpersonal dynamics inherent in entrepreneurial finance, offering new insights into the black box of deal cancellations.