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How to attract the crowd in crowdfunding?

Author

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  • Sibin Wu
  • Bin Wang
  • Yuanqing Li

Abstract

We use signalling theory to study a new capital market finance phenomenon: crowdfunding in China. Our finding indicates that signals such as the frequency of announcements and the amount of the highest bid have an impact on the success of crowdfunding projects. Based on a sample of 192 projects collected on a Chinese crowdfunding platform, demohour.com, we find that the amount of the highest bid has a positive effect on completing a successful crowdfunding project. However, for high-tech industry, our results indicate the amount of the highest bid is not as effective as the movie/music industries. We also find the frequency of announcements made by the project founders is a better predictor for funding success in the high-tech industry than in the movie/music industries.

Suggested Citation

  • Sibin Wu & Bin Wang & Yuanqing Li, 2015. "How to attract the crowd in crowdfunding?," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 24(3), pages 322-334.
    • Handle: RePEc:ids:ijesbu:v:24:y:2015:i:3:p:322-334
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    Citations

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    Cited by:

    1. Righi, Riccardo & Pedrazzoli, Alessia & Righi, Simone & Venturelli, Valeria, 2024. "The clientele effects in equity crowdfunding: A complex network analysis," Journal of Behavioral and Experimental Finance, Elsevier, vol. 42(C).
    2. Jörn Block & Lars Hornuf & Alexandra Moritz, 2018. "Which updates during an equity crowdfunding campaign increase crowd participation?," Small Business Economics, Springer, vol. 50(1), pages 3-27, January.
    3. Shneor, Rotem & Zhao, Liang & Fabian Michael Goedecke, Jann, 2023. "On relationship types, their strength, and reward crowdfunding backer behavior," Journal of Business Research, Elsevier, vol. 154(C).
    4. Zhangxi Lin & Andrew B. Whinston & Shaokun Fan, 2015. "Harnessing Internet finance with innovative cyber credit management," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 1(1), pages 1-24, December.
    5. Wesemann, Henrik & Wincent, Joakim, 2021. "A whole new world: Counterintuitive crowdfunding insights for female founders," Journal of Business Venturing Insights, Elsevier, vol. 15(C).
    6. Anna Prisco & Valerio Muto & Ciro Troise & Mario Tani, 2022. "How to Engage the Crowds to Create Value? Evidence from the Pathfinder Arena Case," Sustainability, MDPI, vol. 14(7), pages 1-22, April.

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