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NOTE: Since 2009 the title of the International Journal of Entrepreneurship Education (IJEE) has been changed to the title above. ISSN numbers: IJEE 1649-2269 and IRE 2009-2822
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ISSN Number: 2009-2822. Frequency: 4 Issues + 1 Hard Copy per year
Article #1635 - What Determines the Success of Crowdfunded Start-ups in the U.K. and the U.S.?
IRE Vol 18: Issue 3, 2020, Pages
Author(s): Sardar Muhammad Usman and Farasat Ali Shah Bukhari (Zhejiang University, Hangzhou, China and COMSATS University Islamabad (CUI), Pakistan), Sultan Sikandar Mirza (University of Waikato, China) and Tanveer Ahsan (Rennes School of Business, France)
Abstract:
The purpose of this study is to examine the role of three market signals related to crowdfunding projects in mitigating the problems of information asymmetry and determining the success of a project. These market signals are media presentation (i.e. whether the project description includes videos and images), project updates, and founder’s competency. We apply binary logistic and probit regression on 500 projects from Kickstarter (U.S.) and 500 projects from Crowdfunder (U.K.). We observe a significant negative association between media presentation and project success and a positive association between founders’ competency and project success in the U.S. These findings suggest that founder’s competency signals mitigate the problem of information asymmetry and plays a significant role in determining the success of the project in the U.S. However, the extensive use of media can communicate negative signals about the project and can reduce the probability of project success. We do not find any significant association between market signals and project success in the U.K. Our results are robust to different regression techniques and econometric models.
