Does the Possibility to Make Equity Investments in Crowdfunding Projects Crowd Out Reward–Based Investments?

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  • Magdalena Cholakova
    Rotterdam School of Management, Erasmus University, Department of Strategic Management & Entrepreneurship, Burgemeester Oudlaan 50, 3062 PA Rotterdam, the Netherlands.
  • Bart Clarysse
    Imperial College London, Business School, Tanaka Building, South Kensington Campus, London, United Kingdom.

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<jats:p> Despite crowdfunding's increasing popularity as a vehicle for financing early–stage ventures, we still know relatively little about the mechanisms that drive individuals to pledge and invest via such online platforms. We explored the extent to which financial or nonfinancial motivations determine the decision to invest for equity or to pledge. In addition, we also looked at whether having invested for equity can crowd out individuals’ motivation to keep a pledge into the same project. Our results show that nonfinancial motives play no significant role. Furthermore, we find that having invested for equity is a positive predictor of keeping a pledge. </jats:p>

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