When money isn’t everything—Exploring different patterns of entrepreneur resource acquisition

Entrepreneurs use business pitches to persuade and gain support from investors. While scholars have examined what makes business pitches successful, they have narrowly defined success as financial capital acquisition. Yet, different types of entrepreneurs (i.e., early-stage vs. late-stage entrepreneurs) need different types of resources. In a qualitative field study of social entrepreneurs, we identify social ties formation as a key outcome of the relationship between early-stage entrepreneurs and investors, one that is key to access other resources. Building on our qualitative findings and the literature on strategic ties formation, we theorize that firms use language referencing relational processes when they prioritize investor relational commitment, while they use language referencing money when they seek investor financial commitment. We test our hypotheses on a database of in person, one-to-many pitches of social entrepreneurs. We find that early-stage firms attract a broader range of investors and a higher amount of financial resources. Also, the benefits of using relational language are higher for early-stage firms who seek to acquire investor relational commitment, whereas later-stage firms using financial language can reduce their disadvantage with respect to the acquisition of financial commitment. These findings add to the literature on strategic ties formation by increasing our understandings of pitches as a proactive networking tool for less-endowed firms.