Why do we invest online? An empirical study of online crowdfunding in China

Purpose - The emergence of crowdfunding has provided a new way to solve the problem of financing difficulties for start-ups. Although crowdfunding has attracted great attention from the government and industry, investors are still hesitating to invest online. This paper aims to investigate the investment behavior of China’s debt-based internet crowdfunding market and construct a model to explain online investment decisions from the perspectives of trust and economic valence. Design/methodology/approach - This paper uses the survey method to verify the research model. The questionnaire was constructed based on the items in prior studies. The data were collected from users with project investment experience on a leading crowdfunding platform in China. A total of 474 valid responses were collected. Partial least squares-structural equation modeling was used in the data analysis. Findings - This paper finds that initial trust and perceived benefits are the key factors influencing investment intentions; investors are more concerned about potential benefits than about risk; perceived benefits partially mediate the relationship between initial trust and investment intentions. Fundraisers’ reputation is also found to have a greater impact on investors’ initial trust than investors’ trust propensity. Originality/value - The conclusions of this paper provide important insights into the design of internet crowdfunding platforms and the regulation of policymakers.