Do early birds catch the worms? The role of early-bird terms in startup crowdfunding
Bibliographic Data
| ID | 12420544 |
|---|---|
| Authors | Yi Wu (0000-0001-6059-3627, Tianjin University), Zhimei Wen (0009-0001-3683-8732, Tianjin University), Xiaopan Wang (0000-0001-7029-476X, Zhejiang Gongshang University), Yangsheng Zhang (Tianjin University), Ben C F Choi (0000-0002-2347-4239, Nanyang Business School, Nanyang Technological University , ,) |
| Year | 2025 |
| Pages | 1-20 |
| Publication date | 2025-10-07 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Internet Research (JOURNAL) |
| Journal identifiers | ISSN: 1066-2243 • E-ISSN: 2054-5657 |
| Publisher | Emerald Publishing Limited (PUBLISHER • GB) |
| DOI | 10.1108/intr-02-2024-0157 |
| OpenAlex | W4414912064 |
| Language | EN |
| References cited | 72 |
Purpose Equity crowdfunding is an increasingly vital source of financing for startup companies. To attract early investors and take advantage of an observed herding effect in online crowdfunding, platforms have introduced the promotional strategy of “early bird” terms (EBT). Based on signaling theory, we investigate the influence EBT has on crowdfunding performance and post-investment engagement, and the moderating role of valuation. Design/methodology/approach We empirically tested a set of hypotheses by analyzing archival data from a leading equity crowdfunding platform that had implemented EBT. Findings We find EBT has significant negative impacts on fundraising performance and investors' post-investment engagement, which is detrimental to sustaining long-term investor interest in the campaign. In addition, enterprise valuation amplifies the negative relationship between EBT and fundraising performance, but does not significantly affect post-investment engagement. Practical implications To enhance equity crowdfunding outcomes, platforms should regulate EBT use, improve campaign vetting, and monitor incentive impacts. Entrepreneurs must balance EBT's appeal with valuation consistency. Investors, especially novices, should evaluate EBT critically, focusing on campaign fundamentals and long-term value to avoid being misled by short-term, superficial cues. Originality/value This study enriches existing literature on online crowdfunding and signaling theory by providing new insights into signaling effectiveness. It highlights the overlooked impact of negative signals, reveals how incentive and financial signals interact, and introduces post-investment engagement as a novel measure of investor behavior, offering a dynamic view of crowdfunding performance
FinTech, Crowdfunding, Digital Finance · Microfinance and Financial Inclusion · Private Equity and Venture Capital
Information Cascades among Investors in Equity Crowdfunding
Mental Accounting and Consumer Choice
No Pain, No Gain
Signaling Theory
Status quo bias in decision making
Informational and emotional appeals of cover image in crowdfunding platforms and the moderating role of campaign outputs
Which updates during an equity crowdfunding campaign increase crowd participation
Does equity crowdfunding democratize entrepreneurial finance
The role of lead investors in equity crowdfunding campaigns with a secondary market
Pricing shares in equity crowdfunding
Should securities regulation promote equity crowdfunding
Equity crowdfunding
Empathy or perceived credibility? An empirical study on individual donation behavior in charitable crowdfunding
The role of project owners' and potential backers' implicit social ties in crowdfunding project success
Success in the management of crowdfunding projects in the creative industries
Factors Influencing Consumer Behavior and Prospective Purchase Decisions in a Dynamic Pricing Environment-An Exploratory Factor Analysis Approach
The Effect of Multiple Extrinsic Cues on Quality Perceptions
| Citation velocity | historical |
|---|---|
| Highly cited | No |