Which updates during an equity crowdfunding campaign increase crowd participation? An exploratory analysis

Start-ups often post updates during equity crowdfunding campaigns. However, little is known about the effects of such updates on funding success. We investigate this question in an explorative way by using hand-collected data from 71 funding campaigns and 39,399 investment decisions on two German equity crowdfunding portals. Using a combination of qualitative and quantitative empirical research techniques, we find that posting an update has a significant positive effect on the number of investments made by the crowd and the investment amount collected by the start-up. This effect does not occur immediately in its entirety; rather, it lags behind the update by a few days. The positive effect increases with the number of words in the update. With respect to the update’s content, we find that the positive effect can be attributed to updates about new funding and business developments as well as updates on promotional campaigns run by the start-up. Updates on the start-up team, business model, cooperation projects, and product developments do not have meaningful effects. Our paper contributes to the literature on the effects of information disclosure on equity crowdfunding success and offers potential guidance for start-ups in designing effective and successful equity crowdfunding campaigns.