Abstract

Crowdfinancing is emerging as a novel way for entrepreneurs to secure early-stage financing. With venture capital still being the most important source of funding for growth-oriented ventures in later stages, this raises the question of potential interactions between crowdfinancing and traditional forms of start-up funding. In this study, we examine the impact and signaling effects that crowdfinancing has on subsequent venture capital funding rounds. Drawing on a choice experimental research design we find causal evidence that while the crowd itself is generally seen as a negative signal, it can generate certain positive signals to which professional venture investors react. Theoretical and managerial implications are discussed.

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