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On the signaling effect of reward-based crowdfunding : (when) do later stage venture capitalists rely more on the crowd than their peers?
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Roma, Paolo, Vasi, Maria and Kolympiris, Christos (2021) On the signaling effect of reward-based crowdfunding : (when) do later stage venture capitalists rely more on the crowd than their peers? Research Policy, 50 (6). 104267. doi:10.1016/j.respol.2021.104267
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WRAP-signaling-effect-reward-based-crowdfunding-Kolympiris-2021.pdf - Accepted Version Embargoed item. Restricted access to Repository staff only until 23 October 2022. Contact author directly, specifying your specific needs. - Requires a PDF viewer. Available under License Creative Commons Attribution Non-commercial No Derivatives 4.0. Download (1547Kb) |
Official URL: https://doi.org/10.1016/j.respol.2021.104267
Abstract
Venture capitalists (VCs) make only a small number of investments and are more likely to invest in ventures where other VCs have invested previously. As such, valuable opportunities may be forgone if they are not funded by VCs in the first place. We demonstrate how crowdfunding (CF) can remedy this concern. Using a sample of new technology-based ventures, we reveal that ventures initially funded through reward-based CF can be even more likely than those initially backed by VCs in attracting follow-up funds from VCs. This happens when ventures originally funded via reward-based CF complement the certification they derive from CF with patents and a founding team with a track record of success. In those cases, VCs rely on the crowd more than their peers. Overall, the results suggest that signal complementarity can at least equalize the effectiveness of an a priori inferior and an a priori superior signal.
| Item Type: | Journal Article | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HG Finance | ||||||||
| Divisions: | Faculty of Social Sciences > Warwick Business School | ||||||||
| Library of Congress Subject Headings (LCSH): | Crowd funding, Venture capital, Investments | ||||||||
| Journal or Publication Title: | Research Policy | ||||||||
| Publisher: | Elsevier | ||||||||
| ISSN: | 0048-7333 | ||||||||
| Official Date: | July 2021 | ||||||||
| Dates: |
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| Volume: | 50 | ||||||||
| Number: | 6 | ||||||||
| Article Number: | 104267 | ||||||||
| DOI: | 10.1016/j.respol.2021.104267 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Access rights to Published version: | Restricted or Subscription Access |
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