The Effect of Crowdfunding Success on Subsequent Financing Outcomes of Start-ups

42 Pages Posted: 22 Mar 2017 Last revised: 29 Jul 2018

See all articles by Sunghan Ryu

Sunghan Ryu

USC-SJTU Institute of Cultural and Creative Industry, Shanghai Jiao Tong University

Keongtae Kim

Decision Science and Managerial Economics, Chinese University of Hong Kong

Jungpil Hahn

National University of Singapore (NUS) - Department of Information Systems and Analytics

Date Written: July 14, 2018

Abstract

From the perspective of signaling theory, this study examines how the receipt of crowdfunding (compared with angel investing) is associated with start-ups’ subsequent financing outcomes. We collected data on crowdfunded start-ups as well as angel-funded start-ups and their subsequent financing from venture capitalists. Our results, after addressing the potential endogeneity using a bivariate probit model and propensity score matching, show that crowdfunded start-ups and angel investing start-ups have no statistically significant difference in receiving subsequent venture capital (VC) investments. Interestingly, however, the effect of obtaining crowdfunding on the receipt of subsequent investments from VCs differs across different characteristics of startup-ups. Moreover, when we compare corporate venture capitalists (CVCs) with independent venture capitalists (IVCs), obtaining crowdfunding is positively associated with the receipt of subsequent investments from CVCs, but not from IVCs.

Keywords: Crowdfunding, angel, start-up, venture capitalists, corporate venture capitalist, signaling theory

Suggested Citation

Ryu, Sunghan and Kim, Keongtae and Hahn, Jungpil, The Effect of Crowdfunding Success on Subsequent Financing Outcomes of Start-ups (July 14, 2018). Available at SSRN: https://ssrn.com/abstract=2938285 or http://dx.doi.org/10.2139/ssrn.2938285

Sunghan Ryu (Contact Author)

USC-SJTU Institute of Cultural and Creative Industry, Shanghai Jiao Tong University ( email )

Shanghai
China

Keongtae Kim

Decision Science and Managerial Economics, Chinese University of Hong Kong ( email )

12 Chak Cheung street
Shatin
Hong Kong

Jungpil Hahn

National University of Singapore (NUS) - Department of Information Systems and Analytics ( email )

Singapore

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