The Crowdfunding Effects on Venture Capital Investment

• 成果类型: Article
• 署名作者: Hu, Ming; Jin, Yannan; Keppo, Jussi
• 署名单位: University of Toronto; Shanghai University of Finance & Economics; National University of Singapore
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.00994
• 发表日期: 2025
• 关键词: Crowdfunding; VC investment; Public signal; Information economics

摘要

We examine the impact of crowdfunding on venture capital (VC) investments in the presence of competition among VC firms. Our economic model comprises a startup, a crowdfunding platform, and two VC firms, each with its own perception of the startup's potential. The startup seeks equity funding from the VC firms and decides on the size of its equity offer. If the VC firms decline to invest, the startup pivots to crowdfunding. Following the crowdfunding campaign, all firms update their beliefs about the startup's likelihood of success based on the crowdfunding outcome, prompting the VC firms to revisit their investment decisions, now with a reduced equity offer if the crowdfunding outcome was positive. This study provides theoretical underpinnings at the firm level for the observed aggregate-level empirical relationships, both positive and negative, between crowdfunding and VC investments. Specifically, based on our model, the positive relationship, where increased crowdfunding activity leads to a rise in subsequent VC investments, is attributed to startups that fail to secure VC funding in the absence of a crowdfunding platform but succeed in attracting VC attention after a successful crowdfunding campaign. In contrast, the negative relationship is attributed to highly valued startups that could have secured VC funding without crowdfunding, but with crowdfunding, VC firms choose to defer their investment decision until after the crowdfunding campaign's result is known; on the one hand, a successful crowdfunding outcome lowers their post-crowdfunding VC investment demand, and on the other hand, an unsuccessful outcome deters potential VC investors. Besides these relationships, we also identify another dynamic, where the option of accessing crowdfunding raises VC investment, even if the startup does not actually launch a crowdfunding campaign.