The emergence of the financial communication function: exploring investor relations in start-ups

Purpose Start-up companies need to attract the interest of investors to grow and mature. Yet, little is known about the investor relations (IR) of start-ups. This study applies a neo-institutionalist perspective to analyze the emergence of the financial communication function within start-ups. It focuses on expectations emanating from the organizational field (investors, in particular) and the institutionalization of the financial communication function as organizations adapt to these expectations. Design/methodology/approach Two qualitative interview studies were conducted in 2022/2023 involving 34 representatives of German start-ups in different growth phases as well as 15 capital providers (venture capitalists, corporate venture capitalists and business angels) investing in German start-ups. Findings The study reveals an organizational field dominated by different types of investors, but also influenced by peers and service providers. We outline an ongoing professionalization of the IR function throughout the start-up stages, primarily driven by adaptation to evolving expectations emanating from the organizational field. Changes in the investor base in different funding phases particularly influence this development. Originality/value This is the first study to examine the emergence of the financial communication function. It contributes both to IR research and to research on entrepreneurial communication. We discuss differences and commonalities between IR in start-ups and listed corporations.