In the early stages of resource mobilization processes, startups must strike a delicate balance between establishing legitimacy with stakeholders and crafting a unique identity that appeals to potential investors. This process can be seen as an ‘expectations game,’ where startups must convince investors on an ongoing basis that they possess exceptional qualities that will yield substantial returns in the future. By doing so, they will continue to secure the necessary resources to deliver on their future promises. Startups employ various rhetorical strategies to shape investors' expectations and motivate their interest which collectively, sometimes involve developing firm-level hype in order to generate an enticing vision of the future. Our study builds on these emerging perspectives to theorize that the effectiveness of hype is contingent on several factors, including both categorical and firm-level factors that influence how investors perceive the comprehensibility, desirability, credibility, and feasibility of a startup’s hyperbolic claims. By shedding light on the contingencies shaping the role of hype in attracting resources for AI startups, we contribute to a better understanding of the challenges startups face in leveraging hype to navigate the challenges of early-stage resource mobilization processes.
