Judging a Crowdfunding Pitch by its Cover: The Influence of Signals and Presentation Quality

Abstract

Crowdfunding represents a unique and increasingly common conduit for the acquisition of entrepreneurial startup capital. Through the integration of signaling theory and dual process theory, we develop a set of hypotheses regarding the role played by both costly signals and presentation quality in determining crowdfunding performance. Our hypothesized relationships were tested using a random sample 323 funding pitches drawn from Kickstarter platform. We introduce the concept of signal flexibility (i.e., the extent to which a signal maintains value across contexts) and provide evidence for its existence. Moreover, our findings indicate that there is a complex interplay between costly signals and presentation quality in terms of their influence of crowdfunding performance.