Challenging platform operational models: how interpersonal trust matter to equity crowdfunding

Abstract

This paper explores the effects of platform operational model on the role that competence and relational trust plays in the success of equity crowdfunding campaigns. Using datasets covering platform life and in-depth interviews, we find building competence and relational trust matters to a success of equity crowdfunding campaigns. The virtual world signalling of selective information on entrepreneurs and lead investors help build competence trust, with its limitation in building relational trust. Physical contacts remain an irreplaceable tool for building relational trust, perceptibly reducing both lead and follow- on crowd investor vulnerability. However, it challenges the fundamental notion of crowdfunding.