Emphasizing the Entrepreneur or the Idea? The Impact of Text Content Emphasis on Investment Decisions in Crowdfunding

Abstract

The criteria for evaluating a crowdfunding project vary from person to person. Some investors are concerned with the entrepreneurs’ profiles, while others are more interested in the creativity behind the project. Most investors evaluate a project by referring to founder-generated content. Entrepreneurs face the choice of emphasizing their own profiles or the project creativity within the limited narrative. Our study is thus motivated to examine how the emphasis of the text narratives affect the fundraising outcomes. We propose an improved deep learning model for text content emphasis (TCE) detection from various textual sources, including titles, blurbs, and detailed descriptions, and then estimate the impact of TCE on the fundraising success of Kickstarter campaigns. Our empirical analyses demonstrate that TCE matters differently for various textual sources. The title and blurb should emphasize the entrepreneur profile, while the detailed description should highlight the idea creativity. Furthermore, for the detailed description, the entrepreneur profile has a more positive effect when it is placed at the beginning of the narrative. And the effects of entrepreneur-oriented narratives are more pronounced in these projects with more social connections. This study contributes to the understanding of TCE, entrepreneur profile disclosure, and social connection in economic exchanges in online crowdfunding.

Keywords: crowdfunding; investment willingness; text content emphasis; text analytics

JEL Classification: M15