 On the signaling effect of reward-based crowdfunding: (When) do later stage venture capitalists rely more on the crowd than their peers?Paolo Roma, Maria Vasi and Christos Kolympiris Research Policy, 2021, vol. 50, issue 6 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. Keywords: Reward-based crowdfunding; Venture capital; Signal; New ventures; Certification effect (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:50:y:2021:i:6:s0048733321000706 DOI: 10.1016/j.respol.2021.104267 Access Statistics for this article Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray More articles in Research Policy from Elsevier |
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