Joint effect of linguistic style and ethnicity on entrepreneurial fundraising: Evidence from equity crowdfunding

Drawing on both signalling theory and the linguistic framing perspective, we propose that the effectiveness of linguistic styles used by entrepreneurs when pitching their ideas to investors, manifested as funding success, depends on entrepreneurs’ ethnicity (white vs. non-white). Using a sample of 430 equity crowdfunding projects, we found that the use of a past-oriented linguistic style and concrete linguistic style led to greater funding outcomes for ventures with minority founders than it did for those with white founders. A future-oriented linguistic style, on the other hand, was found to be more beneficial for ventures with white founders. In addition, we found a consistent pattern of results using the racial composition of an entrepreneurial team rather than the race of individual founders, which implies that investors’ biases are not only limited to individual founders’ ethnicities, but also persist regarding the wider entrepreneurial team.