The crowd-entrepreneur relationship in start-up financing

Thomas Lambert, Aleksandrina Ralcheva, Peter Roosenboom

Research output: Chapter in Book/Conference proceedings/Edited volumeChapterScientificpeer-review

Abstract

This chapter discusses the crowd–entrepreneur relationship as an important foundation for crowdfunding success. We present community benefits enjoyed by the crowd as crucial in shaping the entrepreneur’s choice between different business models (crowdfunding vs. crowdinvesting). Then, in the crowdinvesting context, we show that this crowd–entrepreneur relationship is plagued by persistent asymmetric information problems of hidden information and hidden action, which undermine financing decisions and campaign outcomes. We highlight how entrepreneurs can address these problems by taking sophisticated investors or a syndicate of investors on board.
Original languageEnglish
Title of host publicationThe Economics of Crowdfunding
EditorsDouglas Cumming, Lars Hornuf
Place of PublicationLondon
PublisherPalgrave MacMillan Publishers
Pages57-78
Number of pages22
ISBN (Electronic)978-3-319-66119-3
ISBN (Print)978-3-319-66118-6
DOIs
Publication statusPublished - 2018
Externally publishedYes

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