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A research note on entrepreneurs' financial commitment and crowdfunding success

Jonas Löher, Stefan Schneck and Arndt Werner

No 03/18, Working Papers from Institut für Mittelstandsforschung (IfM) Bonn

Abstract: Established early stage investors decide to invest in new ventures after evaluating the propensity of success and the risk of failure. Consequently, it is of considerable importance that the new business owners have substantial 'skin in the game' and are thus highly committed to business success. Despite its key role in practice, the entrepreneurs' own financial commitment has not yet been discussed in a crowdfunding context. Applying a signaling approach, our empirical findings show that entrepreneurs with comparatively more ex ante financial commitment in their project achieve significantly higher funding success. Moreover, our results suggest that financial commitment is the single most important variable determining funding success.

Keywords: equity crowdfunding; crowdinvesting; campaign success; financial commitment; signaling; entrepreneurial finance (search for similar items in EconPapers)
JEL-codes: G11 G19 G21 M13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-ino and nep-ppm
Date: 2018
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