Entrepreneurial Rhetoric and Business Plan Funding

Entrepreneurial Rhetoric and Business Plan Funding

Thomas H. Allison, Aaron F. McKenny, Jeremy C. Short
Copyright: © 2014 |Pages: 15
DOI: 10.4018/978-1-4666-4999-6.ch002
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Abstract

How entrepreneurs disclose the blemishes of a new venture to investors may be an indicator of relative riskiness and thus may predict how much funding a venture receives. Drawing from venture funding research, the authors propose that hardship rhetoric will have a curvilinear relationship with investment received by a venture. This hypothesis is supported by an analysis of rhetoric reflecting hardship in the memoranda and business plans of 86 high-technology ventures. In addition, the authors find that concrete language in memoranda is positively related to the amount of capital raised. In sum, this study presents the first examination of how the language used in business plans and communications with potential investors influence venture fundraising.
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Rhetorical Strategy In Entrepreneurial Narratives

Research has examined the nature of the communication between entrepreneurs and professional investors after investments have been committed to an entrepreneurial venture (Sapienza & Korsgaard, 1996; Shepherd & Zacharakis, 2001). Yet, communication research makes it clear that entrepreneur-investor interaction is also a significant ex-ante factor in determining whether a relationship and investment will be developed.

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