Tone Ambiguity And The Success Of Cleantech Crowdfunding

The increasing deterioration of the environment creates a high demand for clean technology solutions,which stimulates the rapid growth of new cleantech ventures or start-ups at the same time.However,the main problem is that few of the new ventures can cross the early-stage capital gap.Compared with new non-cleantech ventures,new cleantech ventures face even more severe financial constraints.This is because clean technology is more likely to be disrupted or outdated,and the technology risk of new cleantech ventures is much higher than for new non-cleantech ventures.Fortunately,unlike venture capital and other traditional sources of early-stage capital,crowdfunding enables the entrepreneurs of new cleantech ventures to fund their projects by drawing on relatively small contributions from a relatively large number of individuals.Usually,the founders of crowdfunding disclose information and communicate with investors through a project description on the homepage of their crowdfunding.We notice that,in the context of cleantech crowdfunding,it is a big challenge for founders to provide a project description with a less ambiguous tone.This is because some technologies in cleantech projects are in ‘gray’ areas of development,which is hard to describe clearly.However,previous linguistic research suggests that a clear tone(less ambiguous tone)can help potential investors better understand and interpret the information.Therefore,this thesis aims to examine the association between tone ambiguity and the success of cleantech crowdfunding.To test our predictions,we used the Python software to collect the crowdfunding information from the world’s largest reward-based crowdfunding platform,Kickstarter.After excluding crowdfunding projects with missing information on the project description,we had a sample of 1172 cleantech crowdfunding projects and 26,209 non-cleantech crowdfunding projects.First,we examine whether founders of cleantech crowdfunding could create a reliable signal of quality by providing a project description with a less ambiguous tone and thus boost the success of crowdfunding.In line with our predictions,the results suggest that crowdfunding projects with a less ambiguous project description are favorably treated in the crowdfunding market.They are more likely to succeed and raise more money.Next,we explore how beneficial it is for founders of cleantech crowdfunding to provide a less ambiguous project description using a comparison with non-cleantech crowdfunding.We found that the signaling effectiveness of a less ambiguous tone is more pronounced in cleantech crowdfunding than in matched non-cleantech crowdfunding,which is consistent with the view that the marginal benefit of a signal is larger when there is greater uncertainty about project prospects.Moreover,we further examine whether the signaling effectiveness of a less ambiguous tone in cleantech crowdfunding could be exacerbated in the presence of other signals.The results show that the negative relationship between tone ambiguity and cleantech crowdfunding success is strengthened when cleantech crowdfunding projects have quick updates or more comments,which suggest that investors can integrate those signals together to paint a more complete and favorable picture of the project.Our study provides valuable practical implications.This thesis provides insights suggesting that founders of innovative but risky crowdfunding projects could adjust their tone in the project description to improve communication efficiency and thus boost the success of crowdfunding.In addition,the presence of other signals of quality could enhance the credibility of a less ambiguous tone.