Entrepreneurs face high uncertainty, and often make costly investments in new business ideas without
knowing the expected payoff. This paper empirically examines whether ex-ante assessment of earlystage
startup ideas can predict their subsequent commercialization. We leverage an entrepreneurship
program at the Massachusetts Institute of Technology in which early-stage venture ideas, presented in
the form of succinct standardized summaries, elicit subjective evaluations from a large set of experienced
entrepreneurs and executives. Using data on 652 ventures in multiple industry sectors, evaluated over
an 8-year period, we find that ideas that elicit more positive evaluations are significantly more likely to
ultimately reach commercialization. We further show that these results are driven by venture ideas with
documented intellectual capital in research-and-development-intensive sectors, such as life sciences and
medical devices. We find no evidence, by contrast, that experts can effectively assess the commercial
potential of venture ideas in non-R&D-intensive sectors such as consumer web and enterprise software.
Finally, we find that industry-specific and scientific expertise is not critical to experts’ collective ability
to predict ventures’ commercial viability.
Entrepreneurs face high uncertainty, and often make costly investments in new business ideas without knowing the expected payoff. This paper empirically examines whether ex-ante assessment of earlystage startup ideas can predict their subsequent commercialization. We leverage an entrepreneurship program at the Massachusetts Institute of Technology in which early-stage venture ideas, presented in the form of succinct standardized summaries, elicit subjective evaluations from a large set of experienced entrepreneurs and executives. Using data on 652 ventures in multiple industry sectors, evaluated over an 8-year period, we find that ideas that elicit more positive evaluations are significantly more likely to ultimately reach commercialization. We further show that these results are driven by venture ideas with documented intellectual capital in research-and-development-intensive sectors, such as life sciences and medical devices. We find no evidence, by contrast, that experts can effectively assess the commercial potential of venture ideas in non-R&D-intensive sectors such as consumer web and enterprise software. Finally, we find that industry-specific and scientific expertise is not critical to experts’ collective ability to predict ventures’ commercial viability.