1. What business are entrepreneurs running?
2. How do investors decide whether to invest or not?
3. Investment decisions are not made about any product entrepreneurs are selling?
4. What is the chatbox for?
5. Can decisions just be made on a random basis?
6 Are their winners and losers?
1. What business are entrepreneurs running?
There is no 'business' as such. Entrepreneurs simply choose a level of riskiness and that is all. However entrepreneurs (as in real life) can change how risky their ventures will be, based on the decisions of other investors and the risk preferences of investors.
So entrepreneurs' decision making does need to take into account what is happening in the environment. Entrepreneurs will also become aware of how others are negotiating (from the results of each speedpitch).
However the game does give investors information on which to make their investment decisions.
2. How do investors decide whether to invest or not?
Investors make their decisions based on the following items of information:
a. how does the level of risk chosen by an entrepreneur compare to the level of risk in other ventures in the game?
b. how much equity is the entrepreneur willing to give in return for a stake in the venture and does it look as if the entrepreneur will meet their target?
c. how much has the entrepreneur raised already and how much equity do they have left - are they actually prepared to give this information?
d. how well or badly has the entrepreneur played in previous rounds
3. Investment decisions are not made about any product entrepreneurs are selling?
There are no products, investment decisions are being made about the entrepreneurs and their perceived abilities, trustworthiness and investors' assessment as to whether or not the entrepreneur will reach their target and whether or not they want to build a long-term relationship with the entrepreneur.
4. What is the chatbox for?
In order to make decisions entrepreneurs and investors need to have information about each other. The chat box is used by players to ask questions of the person they are negotiating with. The chatbox can also be used by players to remind others about how well they have done in the past.
Questions investors can ask of entrepreneurs are:
a. what is the level of risk in your venture?
b. how much equity have you raised already?
5. Can decisions just be made on a random basis?
Yes they can be. Investors can choose a random amount of money to invest in a venture and pay little attention to the amount of equity they get in return, but this approach won't necessarily maximise their returns. Similarly entrepreneurs have to take some care about the amount of equity they "give away" in return for the money raised.
6. Are their winners and losers?
Yes there are. In each game there are 5 investors and 5 entrepreneurs, in each game there will be an entrepreneur whose has the highest net worth, they had the winning combination of having raised money and also kept a large proportion of it.