Third-party signals in equity crowdfunding: the role of prior financing
| Autor: | Simon Kleinert, Marc Grünhagen, Christine Volkmann |
|---|---|
| Přispěvatelé: | RS: GSBE other - not theme-related research, Organisation,Strategy & Entrepreneurship |
| Jazyk: | angličtina |
| Rok vydání: | 2020 |
| Předmět: |
Economics and Econometrics
Entrepreneurship Signaling theory Certification INFORMATION VENTURE CAPITALISTS media_common.quotation_subject Non-bank Financial Institutions Financial Instruments ENTREPRENEURS INITIAL PUBLIC OFFERINGS Securities issuance Investment Banking Venture Capital Brokerage Ratings and Ratings Agencies Pension Funds Institutional Investors Information asymmetry 0502 economics and business Quality (business) Equity crowdfunding 050207 economics equity crowdfunding media_common Finance CROWD business.industry 05 social sciences SUCCESS Venture capital PERFORMANCE Entrepreneurial finance General Business Management and Accounting l26 - Entrepreneurship MARKET INVESTMENT DECISIONS Business 050203 business & management Social capital |
| Zdroj: | Small Business Economics, 54(1), 341-365. Springer |
| ISSN: | 1573-0913 0921-898X |
| Popis: | Drawing on signaling theory, this study provides preliminary evidence that prior financing certifies firm quality to investors and reduces information asymmetries in equity crowdfunding. We examine 221 business plans and project descriptions of start-ups that ran equity crowdfunding campaigns on Crowdcube in 2017 and 2018. Almost half of the start-ups had previously raised funds through business angels, venture capitalists, crowdfunding, or grants. Prior financing positively affects campaign success. Overall, the effect is larger for firms backed by multiple investor types and for firms that have run successful crowdfunding before. To isolate the quality signal from the additional benefits related to an affiliation with other investors, we analyze whether the effect of prior financing is moderated by the uncertainty around a project. In support of a signaling effect, preliminary evidence suggests that prior financing is most relevant for firms in the uncertain seed stage. Among the different investor types, we find that, in particular, an affiliation with venture capitalists signals quality. Such an affiliation is more important for firms with low levels of human and social capital. Our study adds to the understanding of how equity crowdfunding interacts with traditional forms of entrepreneurial finance. |
| Databáze: | OpenAIRE |
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