Equity crowdfunding syndicates and fundraising performance: The effect of human capital and lead investor reputation

Purpose–This paper is about equity crowdfunding syndicates as a form of entrepreneurial finance and looks specifically at the lead investors’ human capital and their ability to raise funds. Design/methodology/approach–The authors develop regressions on a unique hand-collected data set of 178 lead investors taken from the US-based platform AngelList. Findings–Results indicate that lead investors’ specialized human capital has a positive effect on their syndicate fundraising performance. However, it does not find a significant effect of general human capital. It also finds that specialized human capital is mediated by the reputation of the lead investor on the platform. Implications–This study extends human capital theory in the crowdfunding context by providing a more comprehensive portrait of human capital, and in doing so shifts the focus from an entrepreneur to an investor perspective, an approach much neglected in the crowdfunding literature. Originality–This study advances the current knowledge on crowdfunding as it is one of the first to understand syndicate investment as an innovative and alternative platform-based financial channel. It also contributes to the current debate on the role of human capital in crowdfunding and more generally to entrepreneurial finance.