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Lexical sophistication and crowdfunding outcomes

Author

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  • Ammara Mahmood
  • Sepideh Yeganegi

Abstract

It is advised that entrepreneurs should keep the language of venture descriptions short and simple. However, knowledge about the conditions under which language in crowdfunding communications impacts investment behavior is limited. We propose that the use of sophisticated language in crowdfunding venture descriptions creates perceptions of venture distinctiveness that, in turn, increase the amount invested. We test this proposed mechanism across a controlled experiment and present evidence from 886 crowdfunding campaigns that increasing the linguistic sophistication of campaign descriptions can result in a 20% increase in the amount raised by a campaign and greater campaign success. Furthermore, we show that the impact of lexical sophistication on the amount raised is moderated by investor experience whereby experienced investors invest more in ventures with sophisticated language compared to inexperienced investors. Our work contributes to research on communication in crowdfunding by highlighting the significance of lexical sophistication in influencing funding behaviour.

Suggested Citation

  • Ammara Mahmood & Sepideh Yeganegi, 2025. "Lexical sophistication and crowdfunding outcomes," Venture Capital, Taylor & Francis Journals, vol. 27(2), pages 171-202, April.
    • Handle: RePEc:taf:veecee:v:27:y:2025:i:2:p:171-202
    DOI: 10.1080/13691066.2023.2265565
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