BWL XI: Paper in EJOR
A new research paper has been accepted for publication in the European Journal of Operational Research (EJOR; VHB: A). In our study, we develop, train, and evaluate a tailored, fused large language model to predict startup success.
Title: A Fused Large Language Model for Predicting Startup Success
Co-authors: Abdurahman Maarouf (LMU Munich), Stefan Feuerriegel (LMU Munich)
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.
The paper is available here (open access): https://doi.org/10.1016/j.ejor.2024.09.011