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The Crowd–Entrepreneur Relationship in Start-Up Financing

  • Thomas Lambert
  • Aleksandrina Ralcheva
  • Peter Roosenboom
Chapter

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.

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Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Thomas Lambert
    • 1
  • Aleksandrina Ralcheva
    • 1
  • Peter Roosenboom
    • 1
  1. 1.Rotterdam School of ManagementErasmus University RotterdamRotterdamThe Netherlands

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