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Summary:
Existing macro level research on the new venture creation process recognises the entrepreneur as a central agent in the process yet generally avoids, at each stage of the process, an examination of the micro level psychological behaviour of the individual entrepreneur. By integrating two theoretical approaches to entrepreneurship research, the psychology of the entrepreneur and the entrepreneurship process, this paper examines, using content analysis, the language used by new venture founders in documents directly linked to their capital raising activity. The study examined the language of 108 offer documents (information memorandum's) which were divided between 54 new ventures that were successful in raising capital and 54 new ventures that either did not proceed further or were not successful in raising capital through the Australian Small Scale Offerings Board. Specifically, we were interested in examining the level of optimism evident in these narratives given that entrepreneurs have been previously described in the literature as being excessively optimistic.
Key words:
Entrepreneurship, optimism, capital raising, process, new ventures
Introduction
Entrepreneurs have been variously described as positive and creative (Baron & Tang, 2011), passionate (Cardon, Wincent, Singh,&Drnovsek, 2009), confident (Koellinger,Minniti, &Schade, 2007), optimistic (Hmieleski& Baron, 2009), motivated by achievement (Stewart & Roth, 2007), resilient (Shepherd, 2003), and committed risk takers (Simon & Houghton, 2003). Arguably such positive affect in entrepreneurs is necessary given the likelihood that just over half of all commencing new ventures will fail (Knaup, 2005). Previous authors have suggested that entrepreneurs require "the application of energy and passion towards the creation and implementation of ideas and creative solutions. Essential ingredients include the willingness to take calculated risks... the vision to recognize opportunity where others see chaos, contradiction and confusion" (Kuratko & Hodgetts, 2004, pg. 30). We thus find it paramount that research attention continues to focus on exploring realistic ways that assist entrepreneurs to redress this high rate of new venture failure.
This paper seeks to explore the language used by entrepreneurs in the offer documents that have been prepared to attract and secure investment in their new or early stage ventures. Specifically, we examine the level of optimism that is evident in the narratives that entrepreneurs use to describe the business opportunity they are presenting to investors. Whilst we are focused explicitly...