This textbook systematically examines cognitive biases, heuristics, and emotional influences that shape investors’ decisions throughout the entrepreneurial journey, from evaluating opportunities to securing funding, valuation, and exit strategies. Based on principles from behavioral finance and cognitive psychology, this book questions the traditional belief in rationality.

While mainstream finance emphasizes risk and return, entrepreneurial finance deals with managing extreme uncertainty and very high risk. Startups without proof of technology and with still-developing business models, operating in weakly defined markets, are seeking funding. Behavioral finance offers tools to understand how investors decide in these challenging environments. This book explores how mental shortcuts (heuristics) and systematic deviations from rationality (biases) interact with the unique aspects of entrepreneurial settings. It provides a multidisciplinary, empirically grounded approach for students, researchers, and practitioners.

Dr. Carolin Bock has been a Professor of Entrepreneurship at Technische Universität Darmstadt (Germany) since 2015. Her primary research interests focus on entrepreneurial finance, particularly decision-making and the value-adding capabilities of different investor types. She also studies academic entrepreneurship, technology transfer processes, and entrepreneurship during crises.

Dr. Norbert Linn has over three decades of experience as a financial services professional, Business Angel, and Private Investor. Since 2020, he has been a lecturer at the Department of Entrepreneurship at Technische Universität Darmstadt (Germany), where he teaches Entrepreneurial Finance. Since 2026, Norbert has been an Honorary Professor. His research focuses on the decision-making behavior of early-stage investors.