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Abstract:
Crowdfinancing is emerging as a novel way for entrepreneurs to secure early-stage financing. With
venture capital still being the most important source of funding for growth-oriented ventures in later
stages, this raises the question of potential interactions between crowdfinancing and traditional forms
of start-up funding. In this study, we examine the impact and signaling effects that crowdfinancing has
on subsequent venture capital funding rounds. Drawing on a choice experimental research design we
find causal evidence that while the crowd itself is generally seen as a negative signal, it can generate
certain positive signals to which professional venture investors react. Theoretical and managerial implications are discussed.
