Nav: Home

Linguistic style is key to crowdfunding success

May 31, 2017

In one of the first crowdfunding studies focusing on social enterprises, researchers at the University of Illinois at Chicago have found that how a pitch is voiced and worded is much more important for social entrepreneurs than for their commercial counterparts.

The researchers examined 656 Kickstarter campaigns from 2013 and 2014. They found that linguistic styles that made the campaigns and their founders more understandable and relatable to the crowd boosted the exposure and success of social campaigns -- but hardly mattered for commercial 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," says Annaleena Parhankangas, assistant professor of managerial studies in the UIC College of Business Administration, who led the study.

"Here, we show that the persuasiveness of entrepreneurs' stylistic expressions is dependent on their category membership -- that is, whether they are social or commercial entrepreneurs."

Short, easily understood and compelling stories, particularly when designing crowdfunding "pitches," or videos, are effective for campaigns addressing social good. However, these styles matter less for campaigns serving consumer markets, the study found.

Parhankangas said social entrepreneurs "also 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.

Parhankangas said 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," she 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."

An interesting avenue for future research would be to investigate professional investors' sensitivity to linguistic styles in crowdfunding pitches, Parhankangas said.
-end-
Maija Renko, UIC associate professor of entrepreneurship, is co-author of the study.

University of Illinois at Chicago

Related Entrepreneurs Articles:

Study: Want more investors to your startup? Better make an impassioned pitch
The brains of potential investors are wired to pay closer attention to entrepreneurs who pitch with passion, according to new research from Case Western Reserve University.
Location matters for home-based female entrepreneurs says new study
A study of 1800 working-aged residents in a public apartment complex in Colombia found that women were more likely to run a home-based business when their randomly-assigned unit was on the ground floor.
Friendships factor into start-up success (and failure)
New research co-authored by Cass Business School academics has found entrepreneurial groups with strong friendship bonds are more likely to persist with a failing venture and escalate financial commitment to it.
Study: Sleep is essential for business leaders seeking next successful venture
The secret ingredient for coming up with great business ideas that can take off, may be something we can all tap into -- a good night's sleep.
Locally-based Haitian social entrepreneurs empower disaster-stricken villages
The Academy of Management Journal has just published a paper titled Collective emotions in institutional creation work, which has been produced at Aalto University School of Business in collaboration with the University of Birmingham.
Belief in the 'prosperity gospel' does not turn people into successful entrepreneurs
Belief in the 'Prosperity Gospel' -- that God financially blesses faithful followers -- does not turn individuals into successful entrepreneurs.
EU sustainable development policy defines entrepreneurship in three distinct ways
A new study has found three distinct ways in which the European Union defines what entrepreneurship means for sustainable development, producing a blurry message of the role entrepreneurs and business owners have to play in tackling the global issue.
Rural innovation policies need to exploit differences within communities
Policies aimed at encouraging rural innovation should take into account the differences between entrepreneurs and how they view where they live, according to a new study.
Entrepreneurs emerge as a force in Europe's refugee emergency
Economic stagnation and a resurgence of racist nationalism are shaping conversations about what it means to be Italian in the 21st century.
Pitch perfect: Strategic language use maximizes the chances of influencing an audience
Research finds four interconnected language strategies that entrepreneurs employ to best influence their audience.
More Entrepreneurs News and Entrepreneurs Current Events

Best Science Podcasts 2019

We have hand picked the best science podcasts for 2019. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Rethinking Anger
Anger is universal and complex: it can be quiet, festering, justified, vengeful, and destructive. This hour, TED speakers explore the many sides of anger, why we need it, and who's allowed to feel it. Guests include psychologists Ryan Martin and Russell Kolts, writer Soraya Chemaly, former talk radio host Lisa Fritsch, and business professor Dan Moshavi.
Now Playing: Science for the People

#538 Nobels and Astrophysics
This week we start with this year's physics Nobel Prize awarded to Jim Peebles, Michel Mayor, and Didier Queloz and finish with a discussion of the Nobel Prizes as a way to award and highlight important science. Are they still relevant? When science breakthroughs are built on the backs of hundreds -- and sometimes thousands -- of people's hard work, how do you pick just three to highlight? Join host Rachelle Saunders and astrophysicist, author, and science communicator Ethan Siegel for their chat about astrophysics and Nobel Prizes.