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 dataset 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. Research limitations/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/value: 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.