Process Theorizing Financial Resource Acquisition in Digital Entrepreneurship: How high-ambition digital startups acquire financial resources beyond seed funding

For many digital ventures, acquiring financial resources in multiple rounds beyond seed funding to grow has become an important part of their entrepreneurial journey. The success rate of raising equity capital beyond their seed investments is, however, very low. Existing entrepreneurship studies on financial resource acquisition have explored how startups and entrepreneurs organize their networks, establish venture legitimacy, and decide on funding sources. Little is known about how and when entrepreneurs should engage with potential investors to increase the likelihood of securing post-seed investments, despite this being identified as an important subprocess in new venture creation. Since financial resource acquisition is a process that unfolds over time, knowing why, when, and how to engage and interact with potential investors is critical to the outcome. We present a process model that explains how digital ventures can raise equity capital through three iterative phases: Triggering, Networking-Engaging-Pitching, and Negotiating-Closing. We also propose that digital ventures can increase the likelihood of raising post-seed financing by structuring the timing of their engagement with potential investors according to their ‘readiness’ to attract investments and to scale. We conclude with an agenda for future research on startup financial resource acquisition as a new venture creation subprocess from a processual perspective.