by Thomas Freireich

Abstract

The writing style a startup uses to portray itself has an impact on investors’ perceptions of them, subsequently affecting their venture capital decisions. This funding is particularly important given the prominence of venture capital as a primary financial source for growing early-stage biotechnology companies. Currently, due to recent scientific advances, many of these startup companies are utilizing novel gene editing based approaches to cure a variety of previously untreated diseases. For the sake of those affected, it is essential that this sector of the biotechnology industry is managed properly early on so that developed treatments can eventually reach FDA approval. This paper is in part inspired by recent happenings revolving around the fraudulent biotech startup, Theranos. Elizabeth Holmes, Theranos’ founder, was renowned for making comments lauding the company’s product. It seemed to many that investors were lulled by the idea of what Holmes made Theranos to be, invested in the company based on false verbal promises instead of the reality of the scientific product. Occurrences like the demise of Theranos are detrimental to both investors and competing companies in need of venture funds in order to develop their treatments. Thus, this paper explores the impact of word-usage and writing style on venture capital investment in various gene editing based startups,hoping to elucidate whether investors are being swayed by word choice.

Professor Michelle Connolly, Faculty Advisor

JEL Codes: M1, M13, O3, O32

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