Asia pacific journal of information systems

The Korea Society of Management Information Systems (한국경영정보학회)
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Investigating Signals on Equity Crowdfunding: Human Capital, Earlier Investors, and Social Capital

  • Jungkook An (Graduate School of Information at Yonsei University) ;
  • Hee-Woong Kim (Graduate School of Information at Yonsei University)
  • Received : 2018.09.30
  • Accepted : 2019.02.12
  • Published : 2019.06.30
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Abstract

Although crowdfunding has emerged as a promising route to fundraising success, little is known about the specifics of equity-based crowdfunding. Using a data set of 1,111 start-ups with investment funding totaling over $4.67 billion, we analyzed the association between a start-up's underlying characteristics and its funding outcome. We found that a start-up's funding outcome is positively associated with its human capital, but negatively associated with earlier investors' business experience. Furthermore, our analyses revealed that investors have higher levels of social capital are a noise signal to later investors. These findings shed light on the critical role of human capital, investors' experience, and social capital as credible signals for start-up investment in equity crowdfunding.

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