Effectuation is a proposed new theory of entrepreneurship, with insufficient empirical testing and critical analysis. Drawing on a new, comprehensive set of theory-building criteria—sourced from and complementing those of Robert Dubin and others—we provide the first formal assessment of effectuation as a theory. We highlight its strengths and weaknesses, leveraging the former to address the latter in five different directions that would build on the existing work to improve this theory. The assessment exercise also displays the value of our assessment framework in guiding the evaluation and development of other existing and future theories in entrepreneurship and management.