Why Do Video Pitches Matter in Crowdfunding?

18 Pages Posted: 11 Oct 2021 Last revised: 23 Sep 2022

See all articles by Maura Kolbe

Maura Kolbe

Goethe University Frankfurt, House of Finance (HoF), Graduate School of Economics, Finance and Management (GSEFM), Students

Sasan Mansouri

University of Groningen - Faculty of Economics and Business; Goethe University Frankfurt; Halle Institute for Economic Research

Paul P. Momtaz

Technische Universität München (TUM) - TUM School of Management; University College London Center for Blockchain Technologies; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 10, 2021

Abstract

Recent research finds that whether or not ventures publish video pitches during crowdfunding campaigns affects the funding success. Little is known, however, about how and why video pitches help startups achieve higher valuations. To close this gap, we analyze metrics and content of video pitches published along blockchain-based crowdfunding campaigns (a.k.a. token offerings, initial coin offerings, or ICOs). We confirm that the publication of video pitches increases the funding amount, and present novel evidence on the mechanisms behind this finding. First, the longer the video, the larger its valuation effect. Second, it is the information content that matters in videos, while non-informational content (e.g., music) has no effect. Third, information conveyed in videos vis-à-vis other channels (e.g., whitepapers) act as informational substitutes. Fourth, investors react positively to buzz words in videos, and this effect is even more pronounced when there are many competing projects. Overall, our results suggest that videos are an important source of information for ICO investors, and investors’ limited attention makes videos (and their content, especially buzz words) more important in “hot” markets.

Keywords: Video pitches, entrepreneurial finance, crowdfunding, token offering, initial coin offering, blockchain, fintech

JEL Classification: G24, L26, M13

Suggested Citation

Kolbe, Maura and Mansouri, Sasan and Momtaz, Paul P., Why Do Video Pitches Matter in Crowdfunding? (October 10, 2021). Journal of Economics and Business, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3939751 or http://dx.doi.org/10.2139/ssrn.3939751

Maura Kolbe

Goethe University Frankfurt, House of Finance (HoF), Graduate School of Economics, Finance and Management (GSEFM), Students ( email )

Grüneburgplatz 1
Frankfurt
Germany

Sasan Mansouri

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Goethe University Frankfurt ( email )

Frankfurt am Main
Germany
015781284258 (Phone)

HOME PAGE: http://www.sasanm.de

Halle Institute for Economic Research

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Paul P. Momtaz (Contact Author)

Technische Universität München (TUM) - TUM School of Management ( email )

Arcisstr. 21
Munich, 80333
Germany

University College London Center for Blockchain Technologies ( email )

UCL CBT UCL Computer Science
Malet Place London WC
London, London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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