# The Impact of Counterfactuals on Early-Stage Investment Decisions Study examines effects of commission and omission errors in venture capital decisions. - **Source:** [Entrepreneurship Theory and Practice](https://journals.sagepub.com/home/etp) - **Published:** 2026-02-21 - **Topic:** [Entrepreneurship](https://brifing.si/c/entrepreneurship) - **Original article:** - **On Brifing:** https://brifing.si/s/5799c59a-f433-4e41-8594-aa1cfcf2c2dc ## What Are Counterfactuals? Counterfactuals are alternative scenarios of how events could have unfolded differently. Investors often ponder 'what if' scenarios about past decisions. This study reveals how this thinking pattern influences investment choices in early-stage ventures. ## Errors of Commission vs Omission The research highlights two types of investment errors: investing in the wrong startup (commission) and missing the right one (omission). Both error types significantly impact investor psychology and future decision-making processes. ## Behavioral Economics Perspective The study analyzes investment decisions through behavioral economics lens. Cognitive biases like loss aversion and overconfidence are examined for their role in shaping counterfactual thinking patterns among investors. ## Challenges in Early-Stage Investing Investing in early-stage ventures involves high uncertainty. With limited data available, investors must make tough calls, making counterfactual thinking particularly prevalent in these high-stakes decisions. ## The Investor's Dilemma Findings show investors regret missed opportunities more than bad investments. This psychological tendency significantly influences future funding decisions and risk appetite in the venture capital space. ## Implications for Entrepreneurs The study suggests entrepreneurs should leverage these psychological insights when pitching. Triggering investors' fear of missing out (FOMO) on potential opportunities could increase fundraising success rates. ## Sources covering this story - https://journals.sagepub.com/doi/abs/10.1177/10422587261419452?ai=2b4&mi=ehikzz&af=R — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._