Abstract

Crowdfunding platforms are emerging as a critical source of early-stage financing for entrepreneurs. Although these platforms reduce the challenges of fundraising, collective action by participants on these platforms increases investor risk. In this study, we investigate the impact of two social influences – investments by high reputation investors and emotional appeals – impact the risk- taking of crowdfunding participants. Our empirical analyses indicate that high-reputation investors decrease the risk-taking, while strong emotional appeals increase risk-taking of crowdfunding participants. Implications of these findings the crowdfunding literature are discussed.

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