A Fused Large Language Model for Predicting Startup Success

• URL: http://arxiv.org/abs/2409.03668v1
• Date: Thu, 5 Sep 2024 16:22:31 GMT
• Title: A Fused Large Language Model for Predicting Startup Success
• Authors: Abdurahman Maarouf, Stefan Feuerriegel, Nicolas Pröllochs,
• Abstract summary: We develop a machine learning approach with the aim of locating successful startups on venture capital platforms. Specifically, we develop, train, and evaluate a tailored, fused large language model to predict startup success. Using 20,172 online profiles from Crunchbase, we find that our fused large language model can predict startup success.
• Score: 21.75303916815358
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: Investors are continuously seeking profitable investment opportunities in startups and, hence, for effective decision-making, need to predict a startup's probability of success. Nowadays, investors can use not only various fundamental information about a startup (e.g., the age of the startup, the number of founders, and the business sector) but also textual description of a startup's innovation and business model, which is widely available through online venture capital (VC) platforms such as Crunchbase. To support the decision-making of investors, we develop a machine learning approach with the aim of locating successful startups on VC platforms. Specifically, we develop, train, and evaluate a tailored, fused large language model to predict startup success. Thereby, we assess to what extent self-descriptions on VC platforms are predictive of startup success. Using 20,172 online profiles from Crunchbase, we find that our fused large language model can predict startup success, with textual self-descriptions being responsible for a significant part of the predictive power. Our work provides a decision support tool for investors to find profitable investment opportunities.

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