Showcasing Strategies: The Role of Entrepreneurial Networking in the Quest for Venture Capital Funding

Abstract 

It is widely established that entrepreneurs’ social capital is a valuable asset in their search for external funding and that entrepreneurial ecosystems offer rich opportunities to develop such social capital. However, relatively less is known about how entrepreneurs can actively engage in networking strategies to raise their profile and attract investment. In this study, we introduce the notion of showcasing strategies and assess their effect on entrepreneurial ventures’ ability to obtain a first round of funding. We argue that entrepreneurs face three key decisions in how to showcase their competence and belonging to the entrepreneurial community: how direct versus indirect, how specific versus generic, and how similar to role models they want to be in the ways they present themselves. By carefully implementing showcasing strategies, entrepreneurs can increase a venture’s salience and legitimacy in the entrepreneurial community, and thus increase the odds of receiving investment. Based on a comprehensive dataset of London-based technology entrepreneurs combining Crunchbase and Twitter data, we find that entrepreneurs who showcase their similarity to established entrepreneurs in the ecosystem, and who balance between showcasing the specific achievements of their company and discussing more general issues relevant for their sector increase the likelihood of obtaining venture capital funding. These effects are manifested above and beyond the effects of beneficial network structures, such as having networks rich in structural holes. We discuss the implications for research on networks and social capital.