Beyond Financing: Crowdfunding as an Informational Mechanism

Cruz, Jordana Viotto da

doi:10.2139/ssrn.2870545

Cited by 4 publications

(4 citation statements)

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“…The results of a crowdfunding campaign can yield such insights as the “size of the crowd” by how many participated, the “values of the crowd” by the amounts pledged, and the “project potential” by the total amount raised, all of which can serve as a monitor for public support of a project or organization. This information is readily available to both those raising the funds and external funders (Viotto da Cruz, 2018).…”

Section: Crowdfunding’s Relationship With Future Fundraising Successmentioning

confidence: 99%

“…This could be a direct result of the crowdfunding campaign providing promotion, networking, and reputational effects leading to greater interest from potential supporters (Quero et al, 2017). A successful campaign may also signal a position of strength to stakeholders, indicating that the organization is able to successfully raise funds or that their efforts have been endorsed by the court of public opinion (Viotto da Cruz, 2018). Campaigns can serve as an opportunity to resolve information asymmetry, demonstrating staying power, quality, and founder credibility to key stakeholders (Courtney et al, 2017).…”

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confidence: 99%

“…Other researchers have suggested the possibility for crowdfunding to “supplant” traditional sources of startup capital and funds (Viotto da Cruz, 2018). One explanation for this would be cannibalization, where those who contribute to the crowdfunding campaign switch their contributions from their usual giving category, resulting in a reduction in the other category (e.g., individual donations).…”

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confidence: 99%

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Crowdfunding Acts as a Funding Substitute and a Legitimating Signal for Nonprofit Performing Arts Organizations

Alexiou

Wiggins

Preece

2020

Nonprofit and Voluntary Sector Quarterly

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This research examines the relationship between crowdfunding campaigns by nonprofit performing arts organizations and their overall fundraising portfolio. Using a dataset compiled from the CrowdBerkeley Initiative and the Cultural Data Project, we find an important link between campaign success and organization age. For young organizations, crowdfunding success attracts funding in the subsequent year, while a failed campaign significantly hampers the organization’s ability to raise funds, suggesting that crowdfunding acts as a legitimating signal. In contrast, older organizations appear to be insulated from the negative effects of a failed campaign. In addition, higher amounts raised in the campaign are associated with a substitution or “crowding out” effect for other types of funding for young organizations, but this effect reverses for older organizations. This suggests that crowdfunding should not only be considered a tool for younger organizations, but also holds promise for established organizations.

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Section: Crowdfunding’s Relationship With Future Fundraising Successmentioning

confidence: 99%

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confidence: 99%

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confidence: 99%

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Crowdfunding Acts as a Funding Substitute and a Legitimating Signal for Nonprofit Performing Arts Organizations

Alexiou

Wiggins

Preece

2020

Nonprofit and Voluntary Sector Quarterly

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“…This category is commonly employed for personal donations towards public goods or humanitarian initiatives (Belleflamme et al, 2015). Secondly, we have reward crowdfunding, which entails offering compensatory benefits, such as discounted prices or tokens of appreciation, to individuals who financially contribute to a project funder (Viotto da Cruz, 2015). Thirdly, there is peer-to-peer lending (P2P) in the form of non-profit and pro-social platforms.…”

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confidence: 99%

Human Capital and Funding Success: Evidence from an Indonesian Equity Crowdfunding

Kusumaningrum,

Risfandy,

Purnomowati

et al. 2023

ajtm

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This study examines the impact of human capital on funding success in the context of Equity Crowdfunding (ECF) by analyzing data from 72 start-up companies seeking funding through SANTARA, the first ECF platform in Indonesia. Our findings indicate that various human capital indicators, including the number of directors, team members, economics undergraduate education, and graduates from foreign universities, do not significantly influence ECF success. However, we observed an intriguing result: start-up leaders with undergraduate degrees have a negative impact on crowdfunding success, leading to longer funding durations. This suggests that start-ups in Indonesia should not solely prioritize leaders with impressive educational backgrounds but should also consider individuals with practical experience in the business industry to enhance their chances of crowdfunding success.

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Market imperfections and crowdfunding

Miglo

2018

Small Bus Econ

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This paper o¤ers a model of crowdfunding that represents a growing area of interest among practitioners and theorists. It is one of the …rst articles analyzing the choice between the di¤erent types of crowdfunding (reward-based vs. equity-based) and the choice between crowdfunding and traditional …nancing. The model is based on standard market imperfections such as asymmetric information and moral hazard as well as on some speci…c features of crowdfunding including the market feedback regarding new projects. The model provides several implications, most of which have not yet been tested. For example, we …nd that when asymmetric information is important, high-quality projects prefer reward-based crowdfunding. The choice of an all-or-nothing mechanism as opposed to a keep-it-all can serve as a signal of a …rm's quality ("signalling by riskbearing"). Crowdfunding is selected over a traditional bank loan if the demand for the product is either very small or very large.

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Beyond Financing: Crowdfunding as an Informational Mechanism

Cited by 4 publications

References 59 publications

Crowdfunding Acts as a Funding Substitute and a Legitimating Signal for Nonprofit Performing Arts Organizations

Crowdfunding Acts as a Funding Substitute and a Legitimating Signal for Nonprofit Performing Arts Organizations

Human Capital and Funding Success: Evidence from an Indonesian Equity Crowdfunding

Market imperfections and crowdfunding

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