An Interdisciplinary Review of Investor Decision-Making in Crowdfunding

A quickly growing body of research is exploring the emerging crowdfunding phenomenon. However, in contrast to traditional startup financing or bank loans, decision-making for investments in crowdfunded ventures is not well researched. Many individual studies investigate aspects that influence investor decision-making in crowdfunding campaigns, but an integrated view of those aspects was not provided to date. We conduct a systematic and interdisciplinary literature review to examine which factors influence investment decision-making in crowdfunding. Based on the analysis of 69 articles we construct a comprehensive framework of relevant influence factors. We elicit systematic differences between crowdfunding and traditional investments, such as venture capital. The differences are: an even higher impact of social capital, the substitution of necessary with available information, and high impact of the digital context. We discuss how information systems (IS) drive those differences. Finally, we derive take-aways for IS researchers and practitioners with focus on interfaces and interactions

An interdisciplinary review of investor decision-making in crowdfunding

Abstract: The Dynamic Principal Component Analysis is an adequate tool for the monitoring of large scale systems based on the model of multivariate historical data under the assumption of stationarity, however, false alarms occur for non-stationary new observations during the monitoring phase. In order to reduce the false alarms rate, this paper extends the DPCA based monitoring for non-stationary data of linear dynamic systems, including an on-line means estimator to standardize new observations according to the estimated means. The effectiveness of the proposed methodology is evaluated for fault detection in a interconnected tanks system

Trust isn’t blind: Exploring Visual Investor Cues in Equity Crowdfunding

Overcoming informational uncertainty and financial risk remains a challenge for crowd investors to trust and interact within the equity crowdfunding (ECF) market. Based on the theoretical lens of herding behavior, we demonstrate that visual cues in investor profiles impact the investment decision of subsequent investors. Specifically, this paper provides preliminary evidence on the effect of investor profile images and badges on investment behavior and campaign funding. In a first study, we draw on a dataset of over 30,000 individual investment observations from a leading ECF platform to show that profile images in particular exert positive effects on subsequent investments. Study 2 will build on these findings through a discrete choice experiment. Our results indicate that herding is driven by the perception of credible investors triggered by heuristic cues. Implications for platform operators are discussed in the paper

Review of Equity Crowdfunding Practices through Santara.id in the Perspective of Islamic Economic Law

This article aims to find out the mechanism of equity crowdfunding through the santara platform from Islamic economic law. This article uses a qualitative method using library data. This article finds that santara.id is an intermediary between investors and issuers in developing a business. The scheme is similar to the muḍārabah contract, the investor is identical to ṣāḥib al-māl, and the issuer is identical to the muḍārib. However, this activity cannot be considered as muḍārabah cooperation because there has been no concrete agreement regarding the muḍārabah agreement. This article provides suggestions so that santara.id can further develop the platform's promotion in the community. It is because santara.id can provide investment services for the middle class, both as investors and issuers

Valuation and effective capital funding in startup firms - "To what extent is startup valuation and investment decisions similar or different in venture capital and equity crowdfunding.

This thesis will discusses the similarities and differences between venture capital and equity crowdfunding based on reviewing literature and document analysis. Equity crowdfunding is a method of raising money by soliciting small investments from a large number of people. Venture capitalists are individuals or organizations that provide funding to startup companies in exchange for a share of ownership in the company. Venture capitalists typically place more emphasis on the potential return on investment when making decisions about whether to invest in a startup. This is because they are usually investing other people's money and need to generate a profit for their investors. Equity crowdfunding investors, on the other hand, tend to focus more on the products or services offered by the startup and whether they believe in the long-term viability of the business. The lack of focus on market data and investor experience means that there is a significant knowledge gap between traditional investors and crowd investors. This knowledge gap can be detrimental to the success of a crowdfunding campaign, as it can lead to unrealistic expectations and a lack of understanding of the risks involved. It is important for entrepreneurs to be aware of this knowledge gap and take steps to bridge it, through education and communication with potential investors. To analyze valuation process of the randomly selected companies I used retrieved valuation documents from the Crowdfunding website Folkeinvest. I downloaded all the available valuation documents of 12 companies that had raised money on Folkeinvest from 2021 to 2022. The average valuation of the chosen companies was MNOK 47. The most used valuation method was Discounted Cash Flows (DCF)-valuation. The funding success rate for the companies that used this method was 66\%. This is compared to a funding success rate of 84\% for the companies that used other methods of valuation or a combination of methodology. When comparing this to other valuation methods from the selection of data, we can see that the other methods generate a higher success rate of funding. This results might be connected to the observations of reviewing the available literature in the section about Decision-making - "Crowds are more interested in product development than financial data

Crowdlending: mapping the core literature and research frontiers

[EN] Peer-to-peer (P2P) lending uses two-sided platforms to link borrowers with a crowd of lenders. Despite considerable diversity in crowdlending research, studies in this area typically focus on several common research topics, including information asymmetries, social capital, communication channels, and rating-based models. This young research field is still expanding. However, its importance has increased considerably since 2018. This rise in importance suggests that P2P lending may offer a promising new scientific research field. This paper presents a bibliometric study based on keyword co-occurrence, author and reference co-citations, and bibliographic coupling. The paper thus maps the key features of P2P lending research. Although many of the most cited papers are purely financial, some focus on behavioral finance. The trend in this field is toward innovative finance based on new technologies. The conclusions of this study provide valuable insight for researchers, managers, and policymakers to understand the current and future status of this field. The variables that affect new financial contexts and the strategies that promote technology-based financial environments must be investigated in the future.Open Access funding provided thanks to the CRUE-CSIC agreement with Springer Nature.Ribeiro-Navarrete, S.; Piñeiro-Chousa, J.; López-Cabarcos, MÁ.; Palacios Marqués, D. (2022). Crowdlending: mapping the core literature and research frontiers. Review of Managerial Science. 16(8):2381-2411. https://doi.org/10.1007/s11846-021-00491-82381241116

Crowdfunding renewable energy investments: : Investor perceptions and decision-making factors in an emerging market

Bridget Okyerebea Menyeh: Writing – review & editing, Writing – original draft, Validation, Methodology, Formal analysis, Data curation, Conceptualization. Theophilus Acheampong: Writing – original draft, Formal analysis, Conceptualization.Peer reviewe

Crowdlending: mapping the core literature and research frontiers

Peer-to-peer (P2P) lending uses two-sided platforms to link borrowers with a crowd of lenders. Despite considerable diversity in crowdlending research, studies in this area typically focus on several common research topics, including information asymmetries, social capital, communication channels, and rating-based models. This young research field is still expanding. However, its importance has increased considerably since 2018. This rise in importance suggests that P2P lending may offer a promising new scientific research field. This paper presents a bibliometric study based on keyword co-occurrence, author and reference co-citations, and bibliographic coupling. The paper thus maps the key features of P2P lending research. Although many of the most cited papers are purely financial, some focus on behavioral finance. The trend in this field is toward innovative finance based on new technologies. The conclusions of this study provide valuable insight for researchers, managers, and policymakers to understand the current and future status of this field. The variables that affect new financial contexts and the strategies that promote technology-based financial environments must be investigated in the futureOpen Access funding provided thanks to the CRUE-CSIC agreement with Springer NatureS

Warm-Glow Giving, Hedonism, and Their Influence on Muslim User Engagement on Loan-Based Crowdfunding Platforms

This paper investigates how platform design features affect the funding motivation of Muslim users on loan-based crowdfunding platforms. Theoretically grounded in Andreoni’s warm-glow giving theory and Sober and Wilson’s model of evolutionary and psychological giving, this work has high practical relevance, given the increasing demand for Islamic financial products. Loan-based crowdfunding platforms are important to the unique context of this research since Islamic religious constraints regulate monetary transactions involving lending. We used a scenario-based survey developed on the basis of a pilot study and confirmed by our manipulation check. The results show that “hedonism” represented by monetary interest negatively affected Muslim users’ willingness to engage in a loan-based crowdfunding project. This finding challenges the commonly agreed-upon egoistic motivator for loan-based crowdfunding platforms (i.e., monetary interest), which is based on Western Christian and Chinese Confucian capitalist economic and financial paradigms. Remarkably, we also found that Muslim funders’ level of willingness to engage on the hedonistic platform had an exponentially positive effect on the amount of money that funders were willing to lend. By contrast, “warm-glow giving,” manifested as belonging to a community, had no effect on users’ engagement. Implications of these findings for theory and practice are discussed

The Problems with and Promise of Entrepreneurial Finance

Acknowledgements: We are indebted to Mike Wright for his encouragement and support and two anonymous reviewers for their helpful comments. We gratefully acknowledge generous financial support from the Social Sciences and Humanities Research Council of Canada.Peer reviewedproo