2023 journal article

Winning the opportunity to pitch: Piquing startup investors? interest by sending the right signals in executive summaries

BUSINESS HORIZONS, 66(1), 75–86.

By: K. Krukowski*, J. Pollack & M. Rutherford*

author keywords: Opportunity introduction; Business pitch; Signaling theory; Cognitive legitimacy; Human capital
Source: Web Of Science
Added: January 23, 2023

The first communication an entrepreneur often has with a potential investor is submitting a one-page executive summary for consideration. Subsequently, the potential investor or investment group chooses which venture ideas to further consider by inviting a pitch deck or an actual business pitch. This investment funnel is competitive and, accordingly, anything we as scholars can share with entrepreneurs seeking advice about how to optimize that initial executive summary to increase chances of getting to the pitch would be immensely valuable. Unfortunately, scant research has focused on this opportunity-introduction stage, and there is precious little we can prescribe for entrepreneurs seeking investment. To address this, we developed four executive summaries that varied only in the type of capital mentioned. We found that executive summaries that mentioned human capital more prominently were viewed as more cognitively legitimate and as deserving of a higher opportunity-recognition valuation. Put succinctly, consistent both with our theorized findings from our Open Science Framework preregistered experiment (N = 367) and with our qualitative follow-up study, we found that human capital signals have a greater positive influence on potential investors’ decisions relative to social capital, intellectual capital, and financial capital. We discuss the practical and theoretical implications of this novel insight and include prescriptive recommendations for entrepreneurs.