Receiving external equity following successfully crowdfunded technological projects: an informational mechanism

Reward-based crowdfunding not only provides finance to entrepreneurs but also generates valuable information on their products’ potential demand, their feasibility, and customers’ satisfaction. This study investigates how information from the campaigns, relating to the funding amount raised in excess of target capital, delays (if any) in product delivery, and crowd sentiment, influences the chances that a venture receives equity capital from professional investors in the aftermath of a campaign. To build a sample of ventures at risk of obtaining equity capital from professional investors, we focus on 300 successful hardware campaigns that have raised $100,000 or more on Kickstarter and Indiegogo. Our results indicate that the information provided by crowdfunding campaigns influences the odds of receiving external equity in the aftermath of the campaign; however, this relationship depends on whether the ventures have already backing from professional investors or not. Our study offers insights into what information professional investors use to assess crowdfunded ventures.