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Comparing Crowdfunding Theory and Practice: The Case of Technology Firms in England

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  • Miglo, Anton

Abstract

This article analyzes crowdfunding campaigns of technology firms in England. We compare the predictions of crowdfunding theories with empirical evidence. We are particularly focused on factors of campaign success related to indirect signalling (such as the choice of campaign target) by founders that have mixed evidence in existing research as opposed to direct signalling (eg. the number of updates by founders). We have found that the campaign target has U-shape effect on success of campaign. For example, the probability of success increases if the threshold value is neither very small or significantly large. This is consistent with the spirit of some theoretical research on crowdfunding. We also provide an overview of literature related to informational problems in crowdfunding, highlight gaps and controversial areas and provide some suggestions for future research.

Suggested Citation

  • Miglo, Anton, 2022. "Comparing Crowdfunding Theory and Practice: The Case of Technology Firms in England," MPRA Paper 111349, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:111349
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    References listed on IDEAS

    as
    1. Gilles Chemla & Katrin Tinn, 2020. "Learning Through Crowdfunding," Management Science, INFORMS, vol. 66(5), pages 1783-1801, May.
    2. Anton Miglo, 2020. "Crowdfunding in a Competitive Environment," JRFM, MDPI, vol. 13(3), pages 1-38, February.
    3. Paolo Crosetto & Tobias Regner, 2014. "Crowdfunding: Determinants of success and funding dynamics," Jena Economics Research Papers 2014-035, Friedrich-Schiller-University Jena.
    4. Evila Piva & Cristina Rossi-Lamastra, 2018. "Human capital signals and entrepreneurs’ success in equity crowdfunding," Small Business Economics, Springer, vol. 51(3), pages 667-686, October.
    5. Belleflamme, Paul & Omrani, Nessrine & Peitz, Martin, 2015. "The economics of crowdfunding platforms," Information Economics and Policy, Elsevier, vol. 33(C), pages 11-28.
    6. Messeni Petruzzelli, Antonio & Natalicchio, Angelo & Panniello, Umberto & Roma, Paolo, 2019. "Understanding the crowdfunding phenomenon and its implications for sustainability," Technological Forecasting and Social Change, Elsevier, vol. 141(C), pages 138-148.
    7. Beck, Thorsten & Demirgüç-Kunt, Asli & Maksimovic, Vojislav, 2008. "Financing patterns around the world: Are small firms different?," Journal of Financial Economics, Elsevier, vol. 89(3), pages 467-487, September.
    8. Christopher Courtney & Supradeep Dutta & Yong Li, 2017. "Resolving Information Asymmetry: Signaling, Endorsement, and Crowdfunding Success," Entrepreneurship Theory and Practice, , vol. 41(2), pages 265-290, March.
    9. Soudipta Chakraborty & Robert Swinney, 2021. "Signaling to the Crowd: Private Quality Information and Rewards-Based Crowdfunding," Manufacturing & Service Operations Management, INFORMS, vol. 23(1), pages 155-169, 1-2.
    10. Chan, C.S. Richard & Parhankangas, Annaleena & Sahaym, Arvin & Oo, Pyayt, 2020. "Bellwether and the herd? Unpacking the u-shaped relationship between prior funding and subsequent contributions in reward-based crowdfunding," Journal of Business Venturing, Elsevier, vol. 35(2).
    11. Karen E. Wilson, 2015. "Policy Lessons from Financing Innovative Firms," OECD Science, Technology and Industry Policy Papers 24, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    crowdfunding; reward-based crowdfunding; crowdfunding in technology sector; digital entrepreneurship; information asymmetry; signalling; factors of crowdfunding success; campaign target;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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