Matching for Impact Co-creating alignment, trust, and communication between social startups and investors

Abstract

In the context of social entrepreneurship, investment relationships are shaped by the dual challenge of achieving financial sustainability while maintaining mission integrity. While alignment between stakeholders in hybrid ventures is critical, little is known about how this process unfolds over time. This study explores how social startups (SSs) in the Netherlands form and sustain mission-aligned investment relationships, with a focus on the interrelated roles of matching, trust, and communication. Drawing on a qualitative, inductive research design, this study is based on 18 semi-structured interviews: 16 with SS founders and 2 with impact investors. Thematic analysis was applied and interpreted post hoc through signaling, agency, and stakeholder theory. Findings reveal that alignment between SSs and investors is not a static precondition, but an evolving, co-constructed process. Early-stage relationships are often built on soft, affective signals, such as shared values, worldview compatibility, and symbolic actions that establish narrative legitimacy. As ventures grow, trust becomes increasingly structured around strategic clarity, milestone delivery, and governance mechanisms. Communication facilitates this progression by enabling mutual understanding, managing expectations, and reinforcing collaboration. This developmental trajectory unfolds in phases: early-stage, growth, and scaling, each associated with different investor types and trust mechanisms. Initial funding often comes from personal networks (“friends, family, and fools”), grounded in emotional and relational trust. Growth-stage ventures attract angel investors and impact-oriented investors drawn to strong mission alignment and compelling founder narratives. At scale, institutional investors (e.g., VC and larger impact funds) place trust in KPI delivery, governance structures, and team credibility. SSs adapt their signaling, trust-building, and communication strategies accordingly, demonstrating that alignment depends not only on strategic fit but also on the investor’s identity, expectations, and interpretive lens. The study contributes to signaling theory by emphasizing the role of soft signals and showing that signal credibility is shaped by cognitive proximity and contextual interpretation. Agency theory is reframed around relational governance, where trust complements rather than replaces formal controls, especially in early stages. Stakeholder theory is extended by foregrounding perceived legitimacy, identity-based bias, and the importance of shared interpretive frameworks. Together, these insights build toward a relational model of alignment in hybrid ventures, where investment relationships emerge not merely through contracts or metrics, but through iterative signaling, trust-based governance, and shared interpretative frameworks. This study offers practical implications for founders, investors, and policymakers seeking to build inclusive, mission-driven investment ecosystems under conditions of uncertainty and institutional complexity.