Equity crowdfunding syndicates and fundraising performance: the effect of human capital and lead investor reputation
Journal of Small Business and Enterprise Development
ISSN: 1462-6004
Article publication date: 20 February 2023
Issue publication date: 28 July 2023
Abstract
Purpose
This paper is about equity crowdfunding syndicates as a form of entrepreneurial finance and looks specifically at the lead investors' human capital and their ability to raise funds.
Design/methodology/approach
The authors develop regressions on a unique hand-collected dataset of 178 lead investors taken from the US-based platform AngelList.
Findings
Results indicate that lead investors' specialized human capital has a positive effect on their syndicate fundraising performance. However, it does not find a significant effect of general human capital. It also finds that specialized human capital is mediated by the reputation of the lead investor on the platform.
Research limitations/implications
This study extends human capital theory in the crowdfunding context by providing a more comprehensive portrait of human capital and in doing so, shifts the focus from an entrepreneur to an investor perspective, an approach much neglected in the crowdfunding literature.
Originality/value
This study advances the current knowledge on crowdfunding as it is one of the first to understand syndicate investment as an innovative and alternative platform-based financial channel. It also contributes to the current debate on the role of human capital in crowdfunding and more generally to entrepreneurial finance.
Keywords
Acknowledgements
Funding: This work was supported by China High-end Overseas Experts Programme under Grant G2022106002L; National Natural Science Foundation of China under Grants 71532003 and 72072008; Basic Scientific Research in Central Universities under Grant buctrc201804; First-class Discipline Construction in Beijing University of Chemical Technology under Grant XK1802-5.
Citation
Zhang, Y., Scholes, L., Fu, K., Hughes, M. and Tang, F. (2023), "Equity crowdfunding syndicates and fundraising performance: the effect of human capital and lead investor reputation", Journal of Small Business and Enterprise Development, Vol. 30 No. 4, pp. 645-666. https://doi.org/10.1108/JSBED-06-2022-0282
Publisher
:Emerald Publishing Limited
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