When money isn't everything: Identifying stage-based patterns of entrepreneurial resource acquisition

Abstract

Scholars often examine how entrepreneurs' existing ties predict resource acquisition. We investigated the reverse: How does the act of pitching generate new ties with investors? Using the context of the Slow Money community, we analyzed social entrepreneurs' pitches to impact investors. Rather than identify a single strategy that benefited all firms, we found that “stage-appropriate framing” facilitated resource acquisition by aligning with investors' expectations. Late-stage entrepreneurs who emphasized financial process framing acquired more financial capital. Conversely, early-stage entrepreneurs who emphasized social process framing developed more investor ties. By shifting attention from the importance of pre-existing networks to the potential of entrepreneurial pitches, our research explains how pitch framing can facilitate the acquisition of both financial capital and investor ties, thereby mitigating liabilities for early-stage firms. Entrepreneurs know that pitches help raise money, but we discovered that they also foster investor ties. In studying pitch competitions in the Slow Money community, we found that different messages resonated with investors depending on a firm's stage. Early-stage entrepreneurs gained more investor ties when their pitches highlighted a willingness to collaborate and engage in true partnerships. Late-stage entrepreneurs attracted more funds when they focused on their business track record. In both cases, matching the pitch framing to the firm stage—and using engaging behavioral cues—helped founders attract stage-appropriate resources. Our research shows that entrepreneurs can raise not just financial capital but also build investor ties without relying on pre-existing networks—when their pitch aligns with their stage.