Dynamics of investor communication in equity crowdfunding
- PDF / 618,268 Bytes
- 18 Pages / 595.224 x 790.955 pts Page_size
- 13 Downloads / 201 Views
RESEARCH PAPER
Dynamics of investor communication in equity crowdfunding Gregor Dorfleitner1 · Lars Hornuf2,3,4 · Martina Weber1 Received: 23 November 2017 / Accepted: 16 April 2018 © The Author(s) 2018
Abstract In crowdfunding, start-ups can voluntarily communicate with their investors by posting updates. We investigate whether start-ups strategically use updates, which have previously been shown to increase investments. To this end, we use hand-collected data from 751 updates and 39,036 investment decisions from two major German equity crowdfunding portals: Seedmatch and Companisto. We find evidence of strategic communication behavior of start-ups during an equity crowdfunding campaign. During the funding period, start-ups more frequently post updates with linguistic devices that enhance the group identity and the group cohesion as well as updates on the business development. Furthermore, the probability of an update during the funding period increases along with strong competition of other contemporary crowdfunding campaigns. Keywords Crowdfunding · Investor communication · Entrepreneurial finance · Sentiment analysis · Linguistic devices JEL Classification G21 · G24 · G32 · L11 · L26
Introduction In recent years, equity crowdfunding has gained increasing importance in providing start-ups with funding. In contrast to traditional early-stage financing sources such as venture capital and banks, equity crowdfunding has introduced the possibility for non-sophisticated private investors to invest in start-ups. However, there are crucial differences between the information rights and the experience of Responsible Editor: Ioanna Constantiou Lars Hornuf
[email protected]; [email protected] Gregor Dorfleitner [email protected] Martina Weber [email protected] 1
Department of Finance, University of Regensburg, Universit¨atsstr. 31, 93053, Regensburg, Germany
2
University of Bremen, Faculty of Business Studies and Economics, Wilhelm Herbst Straße 5, 28359 Bremen, Germany
3
Max Planck Institute for Innovation and Competition, Marstallplatz 1, 80539 M¨unchen, Germany
4
CESifo, Poschingerstr. 5, 81679 M¨unchen, Germany
venture capitalists and crowd investors. In this article, we therefore analyze the communication behavior of startups in equity crowdfunding during and after the funding period and investigate whether entrepreneurs use voluntary disclosure strategically. Recent academic research in equity crowdfunding analyzes follow-up fundings, crowd exits and insolvencies of successfully funded equity crowdfunding campaigns (Hornuf and Schmitt 2016; Signori and Vismara 2018; Hornuf et al. 2018). However, the majority of the literature investigates determinants of the funding success of a campaign. A correlation between the success of campaigns and the size and education of the management team as well as particular project characteristics—e.g. the share of equity offered or disclosure of financial projections—has been shown (Ahlers et al. 2015; Vismara 2016; Bernstein et al. 2017). Furthermore, the
Data Loading...
