Crowdfunding Success Effects on Financing Outcomes for Startups: A Signaling Theory Perspective

45 Pages Posted: 22 Mar 2017 Last revised: 24 Dec 2019

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: December 10, 2019

Abstract

This study examines how crowdfunding (relative to angel investing) influences subsequent venture capital (VC) investments for startups. After addressing the potential endogeneity using a bivariate Probit model with the propensity score matching, we find that crowdfunded startups and angel-backed startups have no statistically significant difference in receiving subsequent venture capital investments. Furthermore, corporate venture capitalists (CVCs) tend to favor crowdfunded startups, while independent venture capitalists (IVCs) prefer angel-funded startups. Startups that have traditionally been neglected fail to overcome the disadvantage in obtaining subsequent VC investments, even after successful crowdfunding campaigns. Important implications for the role of crowdfunding in the startup finance ecosystem are discussed. .

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

Suggested Citation

Ryu, Sunghan and Kim, Keongtae and Hahn, Jungpil, Crowdfunding Success Effects on Financing Outcomes for Startups: A Signaling Theory Perspective (December 10, 2019). 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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