Access Denied: How Equity Crowdfunding Platforms Use Quality Signals to Select New Ventures

Simon Kleinert, Julian Bafera, Diemo Urbig and Christine K. Volkmann

Entrepreneurship Theory and Practice, 2022, vol. 46, issue 6, 1626-1657

Abstract: Among the new ventures actively seeking funds through equity crowdfunding, only a lucky few seemingly survive the rigorous selection process imposed by equity crowdfunding platforms (ECFPs). With a conjoint experiment involving decision-makers from 50 platforms in 22 countries, this study provides first quantitative evidence regarding how ECFPs actually use quality signals to select new ventures to start fundraising campaigns. The ECFPs interpret signals differently, depending on whether they impose a co-investment requirement or generate revenues from new ventures’ long-term performance. The effectiveness of the signals also is contingent on the applicant’s industry background and the signals’ accessibility in the country where the ECFP operates.

Keywords: equity crowdfunding platforms; signaling; screening; entrepreneurial finance; crowdfunding (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:46:y:2022:i:6:p:1626-1657

DOI: 10.1177/10422587211011945

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