ABSTRACT
There have been significant developments in the venture fundraising landscape over the past ten years. Novel forms of venture funding, particularly crowdfunding, have the potential to alter our understanding of how entrepreneurs raise capital. This chapter reviews research that considers these developments from a psychological perspective. We organize this research along the broad classification of theories of persuasion and theories of perception. Persuasion refers to situations in which entrepreneurs attempt to exert influence over funders, with the objective of influencing a funder’s opportunity perceptions. Along these lines, we consider work focused on signaling theory, impression management theory, the elaboration likelihood model of persuasion and entrepreneurial passion. In regard to theories of perception, we consider work focused on theories that have been used to explain why funders react differently to cues provided by different entrepreneurs, their pitches, and their businesses. Here we consider research focused on regulatory fit theory, control theory, and theories that have a focus on gender, including activist choice homophily and stereotype content theory. Where appropriate, we also consider how these theories have been applied to traditional funding settings. Lastly, we suggest future directions for research opportunities focused on the psychological antecedents of raising startup capital.
