From the theories of financial resource acquisition to a theory for acquiring financial resources - how should digital ventures raise equity capital beyond seed funding

Abstract

For many digital ventures, acquiring financial resources in multiple rounds beyond seed funding to grow has become an important part of their entrepreneurial journey. The success rate of raising equity capital beyond their seed investments is, however, very low. Existing entrepreneurship studies on financial resource acquisition have explored separately how entrepreneurs organize their networks, establish venture legitimacy, and decide on funding sources. However, despite being identified as an important subprocess in new venture creation, little is known about why, when, and how entrepreneurs engage potential investors to increase the likelihood of post-seed investments. Hence, this paper synthesizes the literature on financial resource acquisition, theoretical concepts in entrepreneurial financing, and practice knowledge to frame a set of design principles to create a prescriptive process model to increase the likelihood of success in post-seed financial resource acquisition.