Article Abstract
Marketing to investors—especially when seeking funding for startups—is unique, with investors facing extreme uncertainty. This study uses foundational work in marketing, economics, management, finance, and psychology, as well as theories-in-use development with angel and venture capital investors, to build a business-to-investor marketing theory. The theory proposes that investors rely on marketing signals from startups, whether they are costly (financial, social, human, and intellectual resource endowments) or costless (verbal passion and concreteness). Results of a large quantitative field study of 5,334 written proposals from startups show that costly and costless signals have interactive effects on investor acceptance. The natural entrepreneurial tendency to compensate for a lack of costly signals with the use of passionate language backfires, reducing investor acceptance. Only when costly signals are communicated does a greater use of passion increase investor acceptance. Further, written proposals should be moderately concrete when they lack costly signals and should be formulated abstractly when plenty of costly signals can be offered. These contingencies provide insights into costly–costless signal interdependence in business-to-investor marketing and suggest how startups can optimize their written proposals for investor acceptance.
Journal of Marketing, September 2024
About the researcher
Greg Nyilasy, PhD is Associate Professor at Department of Management and Marketing at the FBE, University of Melbourne. His research explores the intersection of brands, marketing and entrepreneurship/innovation. Recent projects target the consumer adoption of digital technologies (Artificial Intelligence, autonomous products, VR/AR) and entrepreneurial resource acquisition and new venture legitimacy. Outside of academia, Greg has executive and consulting experience on three continents in strategy, marketing and innovation. He has helped a wide variety of blue chip corporates and SMEs in consumer packaged goods, finance, healthcare, media, retail, technology and travel. He is Non-executive Director at State Schools' Relief and the Victorian Music Teachers' Association.