Anchor investors and equity crowdfunding for entrepreneurs

  1. Pau Sendra-Pons 1
  2. Alicia Mas-Tur 1
  3. Dolores Garzon 1
  1. 1 Universitat de València
    info

    Universitat de València

    Valencia, España

    ROR https://ror.org/043nxc105

Revista:
European journal of management and business economics

ISSN: 2444-8494,  2444-8451

Ano de publicación: 2024

Volume: 33

Número: 1

Páxinas: 20-36

Tipo: Artigo

DOI: 10.1108/EJMBE-06-2022-0167 DIALNET GOOGLE SCHOLAR lock_openAcceso aberto editor

Outras publicacións en: European journal of management and business economics

Obxectivos de Desenvolvemento Sustentable

Resumo

Purpose–This empirical study uses herd behavior model to explore the role of anchor investors in ensuring fundraising success and overfunding of crowdfunded ventures. Design/methodology/approach–Qualitativecomparativeanalysis(QCA)isappliedtofindtheconfigurational patterns describing how anchor investors’ information disclosure leads to successful financing and overfunding. Findings–Evenwhentheanchorinvestor’sresumeisnotdetailedortheanchorinvestorhaslittleexperience in entrepreneurial investment, success or overfunding can be achieved, provided the anchor investor is a corporation rather than anindividual.Forindividualanchorinvestors,a detailedresumematters.Overfunding can be achieved even when an individual anchor investor makes a small relative investment, if this small relative investment is compensated for by a detailed resume. Experience in entrepreneurial investment is crucial when individual anchor investors have few previous investments. Regardless of the anchor investor’s identity, investment in absolute terms is crucial for crowdfunding success when experience in entrepreneurial investment is low. Such experience must be extensive if the anchor investor’s resume is not detailed. Practical implications– Both entrepreneurs and crowdfunding platforms can benefit from the findings in relation to the design of campaigns that use anchor investors’ informational cues to achieve success and overfunding. Originality/value–Thestudyexaminestheimportanceofanchorinvestors’informationdisclosureindigital crowdfunding environments, differentiating between individual and corporate anchor investors.

Referencias bibliográficas

  • Ackerman,P.L.andHumphreys,L.G.(1990), “Individualdifferencestheoryinindustrialandorganizational psychology”, Handbook of Industrial and Organizational Psychology, Vol. 1, pp. 223-282.
  • Agrawal, A., Catalini, C. and Goldfarb, A. (2016), “Are syndicates the killer app of equity crowdfunding?”, California Management Review, Vol. 58 No. 2, pp. 111-124.
  • Ahlers, G.K., Cumming, D., G€unther, C. and Schweizer, D. (2015), “Signaling in equity crowdfunding”, Entrepreneurship Theory and Practice, Vol. 39 No. 4, pp. 955-980.
  • Akerlof, G.A. (1970), “The market for ‘lemons’: quality uncertainty and the market mechanism”, The Quarterly Journal of Economics, Vol. 84 No. 3, pp. 488-500.
  • Alegre, I. and Moleskis, M. (2016), “Crowdfunding: a review and research agenda”, doi: 10.2139/ssrn. 2900921, available at SSRN: https://ssrn.com/abstract52900921
  • Anderson, C.J. (2003), “The psychology of doing nothing: forms of decision avoidance result from reason and emotion”, Psychological Bulletin, Vol. 129 No. 1, p. 139.
  • Bade, M. and Walther, M. (2021), “Local preferences and the allocation of attention in equity-based crowdfunding”, Review of Managerial Science, Vol. 15 No. 8, pp. 2501-2533.
  • Bahlous-Boldi, M. (2022), “Agency costs and credit availability: an international study”, European Journal of Management and Business Economics, Vol. 31 No. 3, pp. 285-304.
  • Banerjee, A.V. (1992), “A simple model of herd behavior”, The Quarterly Journal of Economics, Vol. 107 No. 3, pp. 797-817.
  • Barbi, M. and Mattioli, S. (2019), “Human capital, investor trust, and equity crowdfunding”, Research in International Business and Finance, Vol. 49, pp. 1-12.
  • Baum, J.R., Locke, E.A. and Smith, K.G. (2001), “A multidimensional model of venture growth”, Academy of Management Journal, Vol. 44, pp. 292-303.
  • Berne-Martınez, J.M., Arnal-Pastor, M. and Llopis-Amoros, M.P. (2021), “Reacting to the paradigm shift: QCA study of the factors shaping innovation in publishing, information services, advertising and market research activities in the European Union”, Technological Forecasting and Social Change, Vol. 162, 120340.
  • Bi, S., Liu, Z. and Usman, K. (2017), “The influence of online information on investing decisions of reward-based crowdfunding”, Journal of Business Research, Vol. 71, pp. 10-18.
  • Brealey, R., Leland, H.E. and Pyle, D.H. (1977), “Informational asymmetries, financial structure, and financial intermediation”, The Journal of Finance, Vol. 32, pp. 371-387.
  • Canovas-Saiz, L., March-Chorda, I. and Yag€ue-Perales, R.M. (2020), “New evidence on accelerator performance based on funding and location”, European Journal of Management and Business Economics, Vol. 29 No. 3, pp. 217-234.
  • Chakraborty, S. and Swinney, R. (2021), “Signaling to the crowd: private quality information and rewards-based crowdfunding”, Manufacturing and Service Operations Management, Vol. 23 No. 1, pp. 155-169.
  • Chen, L., Huang, Z. and Liu, D. (2016), “Pure and hybrid crowds in crowdfunding markets”, Financial Innovation, Vol. 2 No. 1, pp. 1-18.
  • Colombo, O. (2021), “The use of signals in new-venture financing: a review and research agenda”, Journal of Management, Vol. 47 No. 1, pp. 237-259.
  • Colombo, M.G. and Grilli, L. (2005), “Founders’ human capital and the growth of new technologybased firms: a competence-based view”, Research Policy, Vol. 35 No. 6, pp. 795-816.
  • Comeig, I., Del Brio, E.B. and Fernandez-Blanco, M.O. (2014), “Financing successful small business projects”, Management Decision, Vol. 65 No. 2, pp. 365-377.
  • Comeig, I., Mesa-Vazquez, E., Sendra-Pons, P. and Urbano, A. (2020), “Rational herding in rewardbased crowdfunding: an mturk experiment”, Sustainability, Vol. 12 No. 23, p. 9827.
  • Courtney, C., Dutta, S. and Li, Y. (2017), “Resolving information asymmetry: signaling, endorsement, and crowdfunding success”, Entrepreneurship Theory and Practice, Vol. 41, pp. 265-290.
  • Davis, B.C., Hmieleski, K.M., Webb, J.W. and Coombs, J.E. (2017), “Funders’ positive affective reactions to entrepreneurs’ crowdfunding pitches: the influence of perceived product creativity and entrepreneurial passion”, Journal of Business Venturing, Vol. 32, pp. 90-106.
  • Ferretti, R., Venturelli, V. and Pedrazzoli, A. (2021), “Do multiple competing offerings on a crowdfunding platform influence investment behavior?”, Journal of Behavioral and Experimental Finance, Vol. 30, 100506.
  • Florea, A.M., Bercu, F., Radu, R.I. and Stanciu, S. (2019), “A fuzzy set qualitative comparative analysis (fsQCA) of the agricultural cooperatives from south east region of Romania”, Sustainability, Vol. 11 No. 21, p. 5927.
  • Gerrits, L. and Pagliarin, S. (2021), “Social and causal complexity in qualitative comparative analysis (QCA): strategies to account for emergence”, International Journal of Social Research Methodology, Vol. 24 No. 4, pp. 501-514.
  • Gigerenzer, G. and Goldstein, D.G. (1996), “Reasoning the fast and frugal way: models of bounded rationality”, Psychological Review, Vol. 103 No. 4, p. 650.
  • Gimmon, E. and Levie, J. (2010), “Founder’s human capital, external investment, and the survival of new high-technology ventures”, Research Policy, Vol. 39 No. 9, pp. 1214-1226.
  • Hemer, J. (2011), “A snapshot on crowdfunding (No. R2/2011)”, Arbeitspapiere Unternehmen und Region.
  • Hoegen, A., Steininger, D.M. and Veit, D. (2018), “How do investors decide? An interdisciplinary review of decision-making in crowdfunding”, Electronic Markets, Vol. 28 No. 3, pp. 339-365.
  • Hsu, D.H. (2007), “Experienced entrepreneurial founders, organizational capital, and venture capital funding”, Research Policy, Vol. 36 No. 5, pp. 722-741.
  • Huang, S., Pickernell, D., Battisti, M. and Nguyen, T. (2022), “Signalling entrepreneurs’ credibility and project quality for crowdfunding success: cases from the Kickstarter and Indiegogo environments”, Small Business Economics, Vol. 58 No. 4, pp. 1801-1821.
  • Hunter, J.E. (1986), “Cognitive ability, cognitive aptitudes, job knowledge, and job performance”, Journal of Vocational Behavior, Vol. 29, pp. 340-362.
  • Ibrahim, D.M. (2015), “Equity crowdfunding: market for lemons”, Minnesota Law Review, Vol. 100 No. 2, pp. 561-608.
  • Kim, K. and Viswanathan, S. (2019), “The experts in the crowd: the role of experienced investors in a crowdfunding market”, Management Information Systems Quarterly, Vol. 43 No. 2, pp. 347-372.
  • Ko, E.J. and McKelvie, A. (2018), “Signaling for more money: the roles of founders’ human capital and investor prominence in resource acquisition across different stages of firm development”, Journal of Business Venturing, Vol. 33, pp. 438-454.
  • Kraus, S., Richter, C., Brem, A., Cheng, C.F. and Chang, M.L. (2016), “Strategies for reward-based crowdfunding campaigns”, Journal of Innovation and Knowledge, Vol. 1 No. 1, pp. 13-23.
  • Lagazio, C. and Querci, F. (2018), “Exploring the multi-sided nature of crowdfunding campaign success”, Journal of Business Research, Vol. 90, pp. 318-324.
  • Lee, P.M., Pollock, T.G. and Jin, K. (2011), “The contingent value of venture capitalist reputation”, Strategic Organization, Vol. 9 No. 1, pp. 33-69.
  • Li, X., Tang, Y., Yang, N., Ren, R., Zheng, H. and Zhou, H. (2016), “The value of information disclosure and lead investor in equity-based crowdfunding: an exploratory empirical study”, Nankai Business Review International, Vol. 7 No. 3, pp. 301-321.
  • Li, Y., Ling, L., Zhang, D. and Wu, J. (2021), “Lead investors and information disclosure: a test of signaling theory by fuzzy-set qualitative comparative analysis approach”, Managerial and Decision Economics, Vol. 42 No. 4, pp. 836-849.
  • Li, Y., Liu, F., Fan, W., Lim, E.T. and Liu, Y. (2020), “Exploring the impact of initial herd on overfunding in equity crowdfunding”, Information and Management, Vol. 59, 103269.
  • Löher, J., Schneck, S. and Werner, A. (2018), “A research note on entrepreneurs’ financial commitment and crowdfunding success”, Venture Capital, Vol. 20 No. 3, pp. 309-322.
  • Marx, A., Rihoux, B. and Ragin, C. (2014), “The origins, development, and application of Qualitative Comparative Analysis: the first 25 years”, European Political Science Review, Vol. 6 No. 1, pp. 115-142.
  • Mason, C., Botelho, T. and Harrison, R. (2016), “The transformation of the business angel market: empirical evidence and research implications”, Venture Capital, Vol. 18 No. 4, pp. 321-344.
  • Maula, M., Autio, E. and Arenius, P. (2005), “What drives micro-angel investments?”, Small Business Economics, Vol. 25 No. 5, pp. 459-475.
  • Moritz, A. and Block, J.H. (2016), “Crowdfunding: a literature review and research directions”, in Br€ untje, D. and Gajda, O. (Eds), Crowdfunding in Europe. FGF Studies in Small Business and Entrepreneurship, Springer, Cham, pp. 25-54.
  • Moy, N., Chan, H.F. and Torgler, B. (2018), “How much is too much? The effects of information quantity on crowdfunding performance”, PloS One, Vol. 13 No. 3, e0192012.
  • Murray, G.C. and Marriott, R. (1998), “Why has the investment performance of technology-specialist, European venture capital funds been so poor?”, Research Policy, Vol. 27 No. 9, pp. 947-976.
  • Nagy, B.G., Pollack, J.M., Rutherford, M.W. and Lohrke, F.T. (2012), “The influence of entrepreneurs’ credentials and impression management behaviors on perceptions of new venture legitimacy”, Entrepreneurship Theory and Practice, Vol. 36 No. 5, pp. 941-965.
  • Pabst, S. and Mohnen, A. (2021), “On founders and dictators: does it pay to pay for signals in crowdfunding?”, Journal of Business Venturing Insights, Vol. 15, e00247.
  • Petit, A. and Wirtz, P. (2022), “Experts in the crowd and their influence on herding in reward-based crowdfunding of cultural projects”, Small Business Economics, Vol. 58 No. 1, pp. 419-449.
  • Piva, E. and Rossi-Lamastra, C. (2018), “Human capital signals and entrepreneurs’ success in equity crowdfunding”, Small Business Economics, Vol. 51 No. 3, pp. 667-686.
  • Ragin, C.C. (1987), The Comparative Method: Moving beyond Qualitative and Quantitative Strategies, University of California Press, Berkeley.
  • Ragin, C.C. (2008), Redesigning Social Inquiry: Fuzzy Sets and beyond, University of Chicago Press, Chicago.
  • Ramadani, V. (2009), “Business angels: who they really are”, Strategic Change: Briefings in Entrepreneurial Finance, Vol. 18 Nos 7-8, pp. 249-258.
  • Rey-Martı, A., Sendra-Pons, P., Garzon, D. and Mas-Tur, A. (2022), “A comprehensive conceptual and bibliometric study of person-centered methodologies”, Quality and Quantity, Vol. 56 No. 5, pp. 3665-3683
  • Rihoux, B., Alamos-Concha, P., Bol, D., Marx, A. and Rezs€ ohazy, I. (2013), “From niche to mainstream method? A comprehensive mapping of QCA applications in journal articles from 1984 to 2011”, Political Research Quarterly, Vol. 66 No. 1, pp. 175-184.
  • Sendra-Pons, P., Belarbi-Mu~ noz, S., Garzon, D. and Mas-Tur, A. (2022a), “Cross-country differences in drivers of female necessity entrepreneurship”, Service Business, Vol. 16, pp. 971-989.
  • Sendra-Pons, P., Comeig, I. and Mas-Tur, A. (2022b), “Institutional factors affecting entrepreneurship: a QCA analysis”, European Research on Management and Business Economics, Vol. 28 No. 3, 100187.
  • Shen, T., Ma, J., Zhang, B., Huang, W. and Fan, F. (2020), “I invest by following lead investors!” the role of lead investors in fundraising performance of equity crowdfunding”, Frontiers in Psychology, Vol. 11, p. 632.
  • Unger, J.M., Rauch, A., Frese, M. and Rosenbusch, N. (2011), “Human capital and entrepreneurial success: a meta-analytical review”, Journal of Business Venturing, Vol. 26 No. 3, pp. 341-358.
  • Vismara, S. (2016), “Equity retention and social network theory in equity crowdfunding”, Small Business Economics, Vol. 46 No. 4, pp. 579-590.
  • Wang, W., Mahmood, A., Sismeiro, C. and Vulkan, N. (2019), “The evolution of equity crowdfunding: insights from co-investments of angels and the crowd”, Research Policy, Vol. 48 No. 8, 103727.
  • Xiao, L. (2020), “How lead investors build trust in the specific context of a campaign: a case study of equity crowdfunding in China”, International Journal of Entrepreneurial Behavior and Research, Vol. 26 No. 2, pp. 203-223.
  • Zacharakis, A.L. and Meyer, G.D. (2000), “The potential of actuarial decision models: can they improve the venture capital investment decision?”, Journal of Business Venturing, Vol. 15 No. 4, pp. 323-346.
  • Zhao, Y., Xie, X. and Yang, L. (2021), “Female entrepreneurs and equity crowdfunding: the consequential roles of lead investors and venture stages”, International Entrepreneurship and Management Journal, Vol. 17 No. 3, pp. 1183-1211.
Fonte de datos: Dialnet