Touching venture capital investors’ hearts: The use of entrepreneurial story styles to solve the catch-22 in securing funding

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This study examines the effect of entrepreneurial story style on venture capital investors’ intention to invest in new technology-based startups without proof of prototype yet. This explorative research conducts a multiple case study in which entrepreneurs, business angels, and venture capitalists are interviewed. The findings related to the pitches of five new technology-based startups in the Netherlands show that using the ongoing journey style in explaining the market need has a positive effect on venture capital investors’ intention to invest by appealing directly to their emotional logic. Withal, using a combination of both the ongoing journey style as the results-in-progress style to explain the value of the solution, only indirectly affects investors’ intention to invest through investors’ perception of legitimacy related to the startup. That is, the effect of using a combination of both entrepreneurial story styles is mediated by investors’ perception of cognitive legitimacy, pragmatic legitimacy, and moral legitimacy. Herewith, this study proves that using an entrepreneurial story style to convince investors is not purely rhetoric but plays a meaningful role in achieving essential entrepreneurial outcomes, like solving the catch-22 in securing funding
Faculteit der Managementwetenschappen