Crowd-based feedback and early-stage entrepreneurial performance: Evidence from a digital platform

Aurelien Quignon ()
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Aurelien Quignon: uni.lu - Université du Luxembourg = University of Luxembourg = Universität Luxemburg

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Abstract: The ability to identify early-stage venture potential, which has traditionally relied on experts, is challenging because new ideas are uncertain. However, judgment from a large number of evaluators can effectively identify promising ventures. This paper empirically studies whether crowd-based information generates informative feedback for entrepreneurs and seed investors. Using data on 701 early-stage founders of new ventures examined by 2600 evaluators, I estimated the effects of crowd-based ratings on survival and securing seed funds. I find that the crowd rating was uncorrelated with subsequent financing events from seed investors but increased a venture's probability of continuation by 3.1 percentage points. This effect became stronger as the number of evaluators increased. This finding highlights that a judgment aggregation offers information for nascent venture founders.

Keywords: Crowd rating; Entrepreneurial uncertainty; Feedback; Early-stage ventures (search for similar items in EconPapers)
Date: 2023-09
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Citations: View citations in EconPapers (1)

Published in Research Policy, 2023, 52 (7), pp.104792. ⟨10.1016/j.respol.2023.104792⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04701800

DOI: 10.1016/j.respol.2023.104792

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