Co-Investment Network Dynamics in Crowdfunded Ventures

45 Pages Posted: 10 Sep 2015

See all articles by Andrea Ordanini

Andrea Ordanini

Bocconi University - Department of Marketing

Michael Trusov

University of Maryland - Robert H. Smith School of Business

P.K. Kannan

University of Maryland - Robert H. Smith School of Business

Yogesh V. Joshi

University of Maryland - Department of Marketing

Lei Wang

Universidad Adolfo Ibanez, Santiago (Chile)

Date Written: June 6, 2015

Abstract

We examine the relationship between investment behavior of individual investors on crowdfunding platforms and the fundraising outcomes in crowdfunded ventures. Extant research has identified two main drivers for crowdfunding investments: irrational herding behavior of investors driven simply by observation of other investors’ actions; and rational herding behavior where investors take into account venture characteristics along with observed actions of other investors in making their own decisions. Here, we focus on investment characteristics of a network of co-investors in a focal venture on its crowdfunding growth at three stages -- early, middle, and late. Using data on crowdfunding of music artists’ ventures, we find that in addition to the factors identified in previous research, network characteristics such as the cliquishness of co-investors as well as the breadth of their co-investments in other artists play a significant role in determining the growth of investments in crowdfunded music ventures. We also show that this role is particularly important in the late phase, as compared to the early phase, of investment growth.

Keywords: Crowdfunding, Investments, Dynamic Networks, Social Networks, Herding, Network Metrics

Suggested Citation

Ordanini, Andrea and Trusov, Michael and Kannan, Pallassana and Joshi, Yogesh V. and Wang, Lei, Co-Investment Network Dynamics in Crowdfunded Ventures (June 6, 2015). Robert H. Smith School Research Paper No. RHS 2657674. Available at SSRN: https://ssrn.com/abstract=2657674 or http://dx.doi.org/10.2139/ssrn.2657674

Andrea Ordanini (Contact Author)

Bocconi University - Department of Marketing ( email )

Via Roentgen 1
Milan, 20136
Italy

Michael Trusov

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742
United States
(301) 405-5878 (Phone)
(301) 405-0146 (Fax)

HOME PAGE: http://www.emodeler.us

Pallassana Kannan

University of Maryland - Robert H. Smith School of Business ( email )

Department of Marketing
College Park, MD 20742-1815
United States
301-405-2188 (Phone)
301-405-0146 (Fax)

Yogesh V. Joshi

University of Maryland - Department of Marketing ( email )

College Park, MD 20742
United States

Lei Wang

Universidad Adolfo Ibanez, Santiago (Chile) ( email )

Diagonal Las Torres 2640 Peñaleón
Presidente Errázuriz 3485 Las Condes
Santiago, 794-1169
Chile

Register to save articles to
your library

Register

Paper statistics

Downloads
143
Abstract Views
893
rank
200,815
PlumX Metrics