New entrepreneurship research finds that when microenterprises describe their online ventures specifically as social or economic, they receive funding more quickly than if they use both themes in their descriptions. Additionally, emphasizing social themes has a larger impact than emphasizing economic themes. This is a significant finding in that it helps to explain why some ventures get funded more quickly than others.
“How you sell your venture is critically important to how crowdfunders perceive your business and thus, how quickly they decide to support it,” explained Todd Moss, assistant professor of entrepreneurship at Syracuse University’s Martin J. Whitman School of Management, the study’s lead author. “Crowdfunders strongly prefer singular messaging about either social or economic benefits to a balance of both. This is true even if they expect a combination of both in an online venture.”
Professor Moss and his coauthors, Maija Renko (University of Illinois-Chicago), Emily Block (University of Alberta) and Moriah Meyskens (University of San Diego), used software developed for the psychology field to quantify the features of over 83,000 microenterprise descriptions, spanning 15 industries and 60 nations.
“The data showed that ventures emphasizing social themes are funded much more quickly and microenterprises are increasing their emphasis on social themes over time, suggesting they may be learning how to best present themselves online to maximize their funding potential,” said Professor Moss.
Prosocial crowdfunding platforms are commonplace now and pervasive as a way for microenterprises to access capital for their ventures. Kiva, the platform used in this study, has enabled over 1.6 million individuals to lend over $1 billion to over 2.6 million microenterprises in 83 countries.
“In our view, Kiva’s significant impact implores us to continue to understand and research prosocial crowdfunding to better understand the phenomenon and its impact on entrepreneurship globally,” said Professor Moss.
The study, “Funding the story of hybrid ventures: Crowdfunder lending preferences and linguistic hybridity,” is forthcoming in the Journal of Business Venturing.
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