Signaling factors in overfunding: An empirical study based on Crowdcube

Abstract

Equity crowdfunding provides a novel way for ventures in the seed or growth stage to raise capital funds. Different from previous research, this paper focuses on signaling factors in overfunding, using data of Crowdcube, a famous equity crowdfunding platform in UK. We find that perceived risk level and investor communication are closely connected with overfunding. The finishing percentage is positively related to the number of investors, supporting the previous literature on herd behavior and information cascade when information asymmetry exists. Few target equity offering signals positive cash flows in the future and suggests strong confidence of the entrepreneurs, which lowers the uncertainty as well as perceived risk level and drives overfunding. Sharing of videos on LinkedIn gets projects exposed to more potential investors and boosts the finishing percentage while no evidence shows the exposure on Facebook has similar effect. Finally, target funding amount has a positive effect on finishing percentage in overfunding, a result different from the findings in previous work focusing on the driving factors of the success of equity funding project.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 8 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.