Pulling at investors’ heartstrings is the key for entrepreneurs seeking to crowdfund a startup.
A recent study from the University of Oklahoma discovered that certain types of language used by entrepreneurs affect success in generating investment. Specifically, entrepreneurs are more successful in raising micro-loan funding when they spend little time discussing their achievements and accomplishments.
The research indicates that this is the case because lenders are more likely to fund a project in an effort to feel better about themselves, known as the warm glow phenomenon. The research used a technique called computer-aided text analysis to examine 6,000 entrepreneurs.
Research suggests that how entrepreneurs discuss themselves when requesting funding shapes whether investors feel good about helping them. This is important because it suggests emotions are important to the process of raising funds for a new venture.
The research found that when entrepreneurs use a large amount of accomplishment rhetoric, they appear less needy, reducing the level of internal reward a lender would feel.
While the study shows that using emotions to attract start up funding is most successful for entrepreneurs from developing countries, it can still be an effective strategy for U.S. business owners. Researchers point to angel investors, who are thought to be driven not only by the possibility of earning a return on their investment, but also by the satisfaction of helping worthy entrepreneurs
The good news is the money is out there. Your strategy will make all the difference. Give me a call today and we will build the right strategy for your business.