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Innovation and Entrepreneurship Research

Crowd-Investing and the Signaling Effect of Pre-Funding

This research project aims at determining the impact and signaling effects that crowd-investing has on subsequent (conventional) financing. The seed funding gap is still a major obstacle for the initiation of new ventures. Crowd-investing -an innovation in the market for startup finance- could be a possible market-based option to partly close this gap. However, crowd-investing cannot be regarded as a substitute for venture capital or business angel funding, e.g. since it is not likely to fully finance a new venture over time. It is therefore important to study the interaction between crowd-investing and more traditional forms of startup finance. For example, crowd-investing could have positive implications for subsequent financing rounds if venture capitalists interpret it as a positive signal of market acceptance. Conversely, crowd-financing could e.g. indicate increased complexity in the governance of a startup after subsequent financing rounds. Whilst the decision-making process of venture capital managers is an established field of research, these countervailing effects have not been analyzed yet.



Michael Mödl


Entrepreneurship und Innovation