New Technology Assessment in Entrepreneurial Financing - Does Crowdfunding Predict Venture Capital Investments?
Journal
Technological Forecasting and Social Change
Type
journal article
Date Issued
2019
Author(s)
Abstract (De)
© 2018 Elsevier Inc. Crowdfunding is a relatively new gateway for entrepreneurs to access capital for creative and innovative ideas. It allows individuals to start experiments with new products and technologies where the outcome is distant. Yet predicting the success of hitherto unseen products and technologies is fraught with ambiguity and uncertainty. Early stage product experimentation and market access through reward-based crowdfunding, where potential customers provide funds for new unproven products, can therefore provide quality signals to subsequent financiers of new technologies. Our study investigates whether there is a long-run relationship between crowdfunding and VC investments on the aggregate and the industry level. We draw on a dataset covering 77,654 projects that successfully raised funds on Kickstarter and 3260 VC investments in the US between 2012 and 2017. The results suggest that crowdfunding Granger causes VC investments. Moreover, the monthly crowdfunding and VC investment time series are cointegrated. We therefore conclude that successful crowdfunding campaigns lead to a subsequent increase in VC investments. This holds at the aggregate level and particularly for hardware and consumer electronics, as well as fashion. These results enhance our understanding of the co-development between crowdfunding and VC investments. Reward-based crowdfunding helps VC investors in assessing future trends rather than crowding them out of the market.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Number
139
Start page
287
End page
302
Pages
15
Subject(s)
Division(s)
Contact Email Address
tereza.tykvova@unisg.ch
Eprints ID
259370
File(s)![Thumbnail Image]()
Name
1-s2.0-S0040162517301440-main.pdf
Size
1.31 MB
Format
Adobe PDF
Checksum (MD5)
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