Deciphering investment heuristics: Inside the minds of German investors—An empirical study about investors’ decision-making heuristics

Abstract We surveyed 60 German investors—including business angels and investors from venture capital, private equity, and corporate venture capital—to understand how they make investment decisions and interact with their portfolio companies. The extant literature explains the investment process of venture capital firms in a variety of countries—most notably the USA—but to date, no study has specifically examined different types of German investors and their decision-making heuristics. This paper is original in its focus on Germany and its emphasis on investors’ personality characteristics. This study extends existing research by adding questions on investors’ personality traits, cognitive styles, and social perception, and allows a descriptive and comparative overview of investors’ (i) pre-investment activities, (ii) investment decision-making processes, and (iii) post-investment interactions. The study’s empirical findings suggest that investors’ cognitive styles have a strong impact on their overall evaluation of investment opportunities as well as on their offered valuations, with analytically oriented investors placing greater importance on business models and valuations. However, and contrary to expectations, personality traits measured with a modified version of the Big Five personality scale do not explain variance in investment behavior. This research highlights distinct cognitive patterns among investor types, particularly emphasizing business angels’ reliance on intuition, thus offering practical insights for entrepreneurs seeking tailored engagement strategies with different investor profiles.