Signaling Information Management in Entrepreneurial Firms' Financing Acquisition

Abstract

Research has identified the significant effect of new ventures’ signaling information management on their ability to secure private equity financing. This study adopts an integrated signaling and screening perspective to investigate investors’ differing perceptions of signals from ventures, across early financing stages. It proposes a three-step interpretation process. Based on an inductive multiple case study of signaler‒receiver dyads, it finds that to reach a financing decision, angel investors extract a characteristic signal as the fundamental type, orchestrate an acting signal as a supplementary type, and scrutinize the consistency between both. However, venture capital investors extract an action signal as the fundamental type, orchestrate characteristic and endorsement signals as complementary types, and scrutinize the consistency among all three types.