Newswise — How a pitch is worded and voiced matters more for social entrepreneurs than for commercial entrepreneurs raising funds on a crowdfunding platform, according to a new study.
“The persuasiveness of entrepreneurs’ stylistic expressions is dependent on their category membership — that is, whether they are social or commercial entrepreneurs,” says Annaleena Parhankangas, assistant professor of entrepreneurship in the College of Business Administration at the University of Illinois at Chicago, who led one of the first crowdfunding studies focusing on social enterprises. “Research on what makes a crowdfunding projects successful has mostly focused on content, or what one says, and “ignored linguistic style, or how one speaks.”
Parhankangas also said social entrepreneurs “need to build personal rapport with the audience, by sharing personal experiences and using a highly interactive style,” such as asking a series of questions rather than presenting statements. For commercial entrepreneurs, style does not matter as much, and content is likely to be enough to persuade their audience to invest.
The popularity of crowdfunding for entrepreneurial fundraising is growing fast. Social entrepreneurs in particular are finding it to be an important method of funding, as more traditional means of financing have proven inadequate. About 1,250 active crowdfunding platforms worldwide raised about $16.2 billion for companies and causes in 2014, according to the Massolution 2015 Crowdfunding Industry Report.
“Early-stage entrepreneurs are increasingly involved in the theatrical pitching of their projects to various audiences at forums, such as accelerator demo days, pitch mixers, competitions, and online crowdfunding sites,” Parhankangas said. “How they deliver the message matters — and, as a result, it is important to study how entrepreneurs’ language use affects their chances of raising funding.”
Annaleena Parhankangas can be contacted via the communications office at University of Illinois at Chicago (details under Media Contact for logged-in reporters).