Why complex language – not just clarity – can sway funding decisions
“Keep it simple” is the advice most entrepreneurs hear before stepping into an investor pitch. But new research by ESCP Business School’s Dr Lorenz Graf-Vlachy, in collaboration with researchers from the University of Passau and the Technical University of Munich shows a different reality.
The study published in Entrepreneurship Theory and Practice, shows that investors don’t just listen to what entrepreneurs say — they read language as a signal of how entrepreneurs think. And when founders demonstrate the ability to grapple with complexity, investors are more inclined to open their wallets.
Analysing 547 startup pitches delivered at TechCrunch Disrupt competitions and running a randomised experiment with 240 professionals, the researchers identified three clear patterns:
- Language pays. Entrepreneurs who used more cognitively complex language — words showing contrast (“but,” “however”), qualification (“might,” “often”), or comparison (“higher,” “smaller”) — tended to raise more funding. In fact, a one standard deviation increase in such language use was linked to 7.25% more investment — on average about $125,000 above the mean funding of $1.73 million. When faced with uncertainty, investors rely on mental shortcuts about what a “competent entrepreneur” should sound like. Complex language fits that prototype, signalling an ability to weigh alternatives, recognise trade-offs, and navigate ambiguity. As one investor put it: “I want to hear that they’ve thought it through. When an entrepreneur speaks in black and white, they seem unaware of the market and competition.”
- Elite education adds weight. The impact of cognitively complex language was stronger when the founder held a degree from an elite university, which increased investors’ confidence that they were seeing genuine capability rather than empty talk.
- Complexity has limits. More isn’t always better. At very high levels, investors may start to view it as hesitation or indecision — a reminder that entrepreneurship requires not only critical thinking but also the ability to act.
As one seasoned investor interviewed for the study put it: “I want to hear that they’ve thought it through. When an entrepreneur speaks in black and white, they seem unaware of the market and competition.”
The pattern is visible in practice. The founders of fintech unicorn N26 gave a pitch rich in cognitively complex language — and went on to raise more than $10 million within a year.
“Language is one of the key signals investors analyse when making high-stakes choices. What they are really looking for are entrepreneurs who can navigate ambiguity, weigh trade-offs, and still move forward decisively.”
Dr Lorenz Graf-VlachySenior Research Fellow at ESCP and co-author of the study
Why it matters
The findings challenge long-standing assumptions in entrepreneurship training. For founders, they suggest that clarity matters — but oversimplifying can send the wrong signal. For investors, the study reveals how subtle biases in reading language can shape who gets funded, often amplifying the advantage of those with elite credentials.
The full article, How Entrepreneurs’ Use of Cognitively Complex Language Affects Investor Funding, is available here.
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