Gaining Financial Support: The Key to Entrepreneurial Success - Essay Sample

Introduction

It requires a lot of commitment and a long road from the original business plan to a well-established company. One of the critical stages that an entrepreneur must face is gaining financial support. The financial support often begins in the form of a pitch (Osiakwan, 2017). In the stage, the primary aim of an entrepreneur is to persuade investors on the profitability or validity of a particular business idea or product (Tanno, 2019). The first contact between an entrepreneur and the investors provides the first impression, which often counts. When establishing a startup company from scratch, founders encounter numerous challenges comprising of developing a mission and a vision, creating a promising business idea, and acquiring and organizing a dynamic team to operate the business.

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Usually, after the first challenge of creating a business idea, another challenge the entrepreneur faces is how to obtain financial support (Barrett, 2016). An entrepreneur is expected to come up with ways to share the idea and the objective of the company to the capable investors to secure investment. In recent years, a change has been experienced in how communication of plans and ideas is done by startups. The pitch has so far replaced the traditional communication of business ideas and plans (Tanno, 2019). Currently, pitching is considered as the primary communication method with the investors for most of the startups. While striving to persuade investors to consider investing in your business idea, strong communication, and improved presentation techniques are paramount. Raising financial capital for most startups has become a very competitive field, and the success is determined by how good a story presented by an entrepreneur is to the investors. The story must be backed up with a good business plan and enhanced skills of persuasion to venture capitalists and convince angel investors.

Despite the popularity of a pitch as a method executed by startup companies to communicate their business ideas to the investors, several ambitious and young entrepreneurs are less informed about it. Most significantly, pitching in other countries has become a significant challenge for young entrepreneurs since they have limited knowledge of how to perform pitching in foreign countries (Boni, 2012). Like other means of cross-cultural communication, startup pitch in foreign nations is difficult since it involves numerous challenges and issues which must be addressed. There are a lot of "rhetorical and non-verbal communication" differences between the startup pitches in South African and American cultures.

Significance of the Research

The best African nation to do a startup pitching is in South Africa. Cape Town, which is the capital city for South Africa, has more than 60% of all the South African startups (Koltai, 2016). In recent years South Africa has created an influential technology culture for startups. Technology has become easily accessible and less costly in this country over the last five years. Venture capital is ordinary, and it is increasing for young entrepreneurs. In 2015 venture capital was at $77MM, and this increased to $160MM in 2017, which is a 102% increase (Tanno, 2019). South Africa is one of the African countries which have received more than $50MM startup funding. On cultural dimensions linked with entrepreneurship, South Africa resembles the United States explicitly about merit, opportunism, and individuality (Tanno, 2019). The overall rate of entrepreneurship in South Africa is at 6.9% lower as compared to emerging peers (Koltai, 2016). South Africa presents low tolerance to failure with an increased number of entrepreneurs who wish to make a social impact. The innovation-driven culture for South Africa has enhanced entrepreneurship. Risk aversion is another important entrepreneurial feature that influences both the entrepreneurs and investors, and this might block highly skilled tech talent from engaging in entrepreneurship. The fixed internet services in South Africa are weak, and the reduced number of citizens have at-home coverage.

For firms, it is essential to understand the present trends in the industry so that they do not lag in market movements. One of the trends is in the growing area of the young, focused, and flexible startups in Cape Town. The Tech Venture capital in South Africa shows that the Startups in South Africa have increased in recent years, and the funding is approximately $50MM of all the African nations (Tanno, 2019). South Africa is one of the top 5 most dynamic locations for a startup in Africa. Most of the successful startups in South Africa often begin their startups in Cape Town and change, later on, expanding into other markets. Since the expansion is accompanied by significant financial spending, raising financial capital in a foreign nation is a crucial stage for a startup that is striving to obtain a global success. Hence, pitching for investors in an international social business market is critical for the worldwide operation of the startup.

Research is essential for two startups. One of the major audience is the South African founders of startups who are determined to sell their business plans and ideas in the US. Since the study analyses the non-verbal and rhetorical differences in communication between South African and American culture, it will issue important data and proposals to assist South African companies to quickly adjust their approach of pitching (Koltai, 2016). The second target encompasses the startups from the US, which are aiming to pitch to the South African Investors. The thesis provides the startup pitchers with relevant information on how a set up in the US differs from pitching in South Africa.

Problem Definition

The area of startup business has not undergone comprehensive research in recent decades. Since startups are a new feature of entrepreneurship, no serious study has been performed to reveal important details about them. There are no academic works of literature on the topic of startups pitching, despite pitching obtaining tremendous relevance in the last few years. Numerous entrepreneurship will be willing to engage in startup pitching in foreign nations so that they can expand on their markets and performance (Tanno, 2019). Without relevant information on how to communicate their ideas in foreign countries, the investors are less likely to be persuaded into buying the ideas of these entrepreneurs. Researching foreign investors and markets is important for every entrepreneur as they strive to understand the financial support and the performance of the young and innovative companies in the new countries.

As numerous South African startups are seeking expansion in their business into the American market, which provides a massive potential in the market, they heavily rely on the information about how to pitch to the investors from America. Pitching involves the different forms of communication, which is acceptable for every country (Koivisto, & Paaso, 2018). The non-verbal forms of communication used in America must be learned by the South African entrepreneurs so that they can successfully persuade the investors. Non-verbal communication involves rational information like facts, numbers, and other relevant data. The entrepreneurs must also observe the relationship level of communication. Rhetoric communication consists of the scientific aspects of language and the features of communication and how it should be applied for excellence. Rhetoric communication provides essential aspects required to emphasize the entrepreneur's message and to inspire the action from investors (Cremades, 2016). Essential rhetorical communication is storytelling. To be an excellent storyteller, the founder must address the content and pitch delivery. The non-verbal forms of communication, such as eye contact, gestures, and facial expression, are fundamental during pitching.

In the present business world, the number of pitching professionals who have dual knowledge in markets and an understanding of the difference in pitching in different countries is minimal. The few available experts obtained the knowledge through numerous years of experience by evaluating several pitches and working diligently on the topic (Bayley & Mavity, 2011). The present startup companies are relying highly on the expertise and knowledge of the available pitching professionals. The current reliance on the support, pitching data, and pitching training is high, and this above the number of the available experts, which creates another issue. Generally, there is a limited academic study on startup companies and also on the crucial aspects such as the dissimilarities in non-verbal and rhetoric communication between the US and South Africa. The challenge calls for the attention of the researchers to expand on the field during their research (Tanno, 2019). The startup entrepreneurs are most likely to benefit from the information obtained in the researches since they will be capable of adjusting their pitches while sharing their startup plans and ideas in the US or among the investors in America. Therefore, the research paper is determined to provide a solution to the existing problems by providing relevant information and data for the startup pitchers in South Africa and America.

Research Objective and Questions

The research question to be addressed by the paper is, "what are the rhetorical and non-verbal communication differences of startup pitches in the American and South African culture?" The study question will be separated into two areas for the sake of the study. The first will focus on the rhetorical concept of startup pitches in South Africa and America. The second is to address the aspects of non-verbal communication of startup pitching and the difference between America and South Africa (Sprinkle, 2015). The primary objective of the research is to assist the South African startup founders in being sufficiently prepared for selling their ideas and plans in the US.

In return, they will obtain information on how non-verbal and rhetoric communication is different in the US and South African cultures so that the founders can formulate solutions to overcome the challenges associated with the differences in the customs for the two countries (Tanno, 2019). Apart from the principal objective of the research, the thesis provides also provide information to the American startup entrepreneurs who are focused on launching their startup business in South Africa. The information on the difference between the Americana and South African culture in the paper will be beneficial to the American startup companies to adjust their pitches for sharing in front of investors in South Africa. The startup entrepreneurs from either America or South Africa can use the information from the research to understand the non-verbal and rhetoric communication aspects for their nations.

References

Barrett, T. (2016). Business model innovation in South African startups (Doctoral dissertation, University of Pretoria). https://pdfs.semanticscholar.org/23c1/c4a69d9f26c8e3e071bead00a415230766b9.pdf

Bayley, S., & Mavity, R. (2011). Life's a pitch: how to sell yourself and your brilliant ideas. Random House.

Boni, A. A. (2012). The pitch and business plan for investors and partners. Journal of Commercial Biotechnology, 18(2). https://doi.org/10.5912/jcb509

Cremades, A. (2016). The art of startup fundraising: pitching investors, negotiating the deal, and everything else entrepreneurs need to know. John Wiley & Sons.

Koivisto, E., & Paaso, M. (2018, July). Perfect P...