Entrepreneurship Theory and Practice · 2014 · 589 citations · 35 references
BusinessEconomicsFinanceBehavioral FinanceEntrepreneurial FinanceProject FinanceOnline FundraisingVenture FinancingCrowdfunding DecisionsCrowdfunding In Early-stage FinanceEarly-stage InvestmentOnline Crowdfunding
Crowdfunding is popular for early‑stage venture financing, yet the mechanisms driving individual pledges and equity investments remain poorly understood. The study examined whether financial or nonfinancial motives influence choosing equity investment versus pledging, and whether equity investment crowds out subsequent pledging to the same project. Nonfinancial motives did not significantly affect investment decisions, while equity investment positively predicted continued pledging to the same project.
Despite crowdfunding's increasing popularity as a vehicle for financing early–stage ventures, we still know relatively little about the mechanisms that drive individuals to pledge and invest via such online platforms. We explored the extent to which financial or nonfinancial motivations determine the decision to invest for equity or to pledge. In addition, we also looked at whether having invested for equity can crowd out individuals’ motivation to keep a pledge into the same project. Our results show that nonfinancial motives play no significant role. Furthermore, we find that having invested for equity is a positive predictor of keeping a pledge.
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