Self-Disclosure of Weaknesses and Entrepreneurs' Access to Financial Capital.

This paper examines how self-disclosure of weakness affects entrepreneurs' access to financial capital based on two field studies. While existing literature has focused on how entrepreneurs emphasize positive information in self-presentation, less is known about whether and how entrepreneurs voluntarily disclose unfavorable information about the new venture to acquire financial capital. We propose that entrepreneurs can enhance their access to financial capital by actively disclosing their weaknesses, thereby cultivating both cognition-based and affect-based trust among investors. Furthermore, we hypothesize that the effectiveness of such disclosure is contingent upon how the weakness is attributed and the level of language concreteness employed. We suggest that employing concrete language in self-disclosure of external weaknesses proves more effective in attracting financial capital. This approach enables entrepreneurs to substantiate the credibility of external attributions, thus reinforcing cognition-based trust. Conversely, using less concrete language in self-disclosure of internal weaknesses is more effective, as it helps entrepreneurs evade potential audience backlash associated with internal attributions, thereby sustaining affect-based trust. Our hypotheses find support in the results obtained from a dataset comprising 43,628 crowdfunding campaigns on Kickstarter, as well as from a dataset of a business plan competition involving 262 teams. [ABSTRACT FROM AUTHOR]