Drawing on a theoretical framework associated with the cognitive perspective, we propose that investors will rely on heuristic cognitive processes when signals from entrepreneurs are congruent or imbalanced incongruent. However, when signals are balanced incongruent, investors will engage in systematic cognitive processes that incorporate additional information from the herding behavior of other investors. We find evidence supporting our hypotheses in a sample of campaigns listed on a UK equity crowdfunding platform. Further analysis employing advanced machine learning techniques reveals that investors engage more in systematic processes when signals from entrepreneurs are in a weak form of balanced incongruence rather than a strong form.

Herding behaviour in equity crowdfunding and P2P lending markets: A systematic meta-analysis

Purpose: The objective of this paper is to examine factors that influence funders' intention to contribute to equity crowdfunding platforms through the role of perceived trust in Malaysia. Based on the Theory of Planned Behavior (TPB), this study incorporates motivational factors of intrinsic and extrinsic rewards to provide insight on what motivates Malaysian equity funders to contribute to crowdfunding platforms. Design/methodology/approach: Ex post facto research was adopted to address the objective of this study. Data was collected using a stratified random sampling technique and a 5-point Likert scale survey questionnaire were distributed online. From the disseminated questionnaire, data were obtained from seventy-six (76) potential investors actively participating in crowdfunding located around Selangor state, Malaysia. The empirical data gathered was analyzed using SmartPLS software utilizing the Partial Least Squares Structural Equation Modeling (PLS-SEM), to examine the relationships among the TPB constructs, and intention to contribute to equity crowdfunding platform. Findings: Extrinsic rewards were found to exert a strong influence on perceived trust, which subsequently creates a positive effect on funders’ intention to invest in a crowdfunding platform. Traditional TPB components, attitude, subjective norm, and perceived behavioral control, along with intrinsic rewards, failed to produce statistically significant results to funders’ intention however perceived trust emerged as a key mediator, confirming its vital role as a stimulator to increase funders’ intention in contributing to the equity crowdfunding platform. Practical implications: The findings highlight the need for building perceived trust to enhance funders’ interest in making contributions to equity crowdfunding platforms due to the perceived risk of high failure, as it involves startups or early-stage ventures. Besides, limited access to detailed financial information of startups makes trust a crucial psychological determinant for motivating contributions. Thus, emphasizing the tangible benefits may further improve funders’ retention and encourage participation in equity crowdfunding platforms. Originality/value – This study adds to the expanding literature on crowdfunding and equity crowdfunding by integrating the empirical factors essential for validating and encouraging investors’ participation in crowdfunding platforms into an innovative, inclusive, and flexible financial model. Additionally, since crowdfunding also serves as support platforms for social, cultural, and environmental causes, donors can directly support issues they care about, and innovators can develop high-impact solutions that mainstream funders might deem too risky.

This study examines the regulatory framework, contractual structures, and legal challenges of conventional and sharia equity crowdfunding as alternative financing mechanisms for Micro, Small, and Medium Enterprises in Indonesia, with comparative insights from Malaysia. The research employs a normative legal methodology analyzing primary legal instruments including Indonesian Finance Authority Regulation, and related regulations, supplemented by empirical literature examining crowdfunding implementation in both jurisdictions. The findings reveal that Indonesia operates a dual regulatory framework combining securities regulations with Islamic jurisprudential guidance, while Malaysia pioneered ECS licensing in 2015 with ongoing debates regarding Sharia governance depth. Conventional equity crowdfunding employs standard share subscription agreements under corporate law, whereas sharia equity crowdfunding utilizes Islamic contracts including musharakah, mudharabah, qardh hasan, and ijarah to ensure compliance with prohibitions against riba, gharar, and maysir. The study identifies three significant legal issues: regulatory gaps particularly concerning sharia share offering provisions and Sharia Supervisory Board responsibilities, cybercrime vulnerabilities affecting unregistered platforms comprising approximately ninety percent of sharia operators, and money laundering risks through electronic payment mechanisms. The research further demonstrates that religious investors significantly influence crowdfunding success, with Islamic campaigns attracting 37.1 percent higher funding based on empirical evidence from comparable markets. The study concludes that effective sharia crowdfunding development requires statutory-level legislation, enhanced Indonesian Finance Authority Regulation supervision of unregistered platforms, mandatory cybersecurity standards, comprehensive Sharia governance frameworks with separate review, audit and risk functions, and targeted financial literacy programs. These recommendations aim to bridge the gap between sharia principles and positive law while expanding MSME access to equity-based financing aligned with maqasid al-Shariah objectives.

Abstract Equity crowdfunding (ECF) platforms rely heavily on visual information while operating under pronounced information asymmetries, raising the question of whether founder facial attractiveness functions as a consequential signal in retail investors’ decision making. Drawing on signaling theory and dual-process/thin-slice accounts, we investigate whether and why founder facial attractiveness influences perceived venture success, investment amounts, and expectations of reciprocity. Using an eight-round, incentive-compatible ECF-like task, 229 lay investors evaluated AI-generated founder portraits that were rigorously pretested to manipulate facial attractiveness while holding perceived leadership suitability constant, thereby isolating the effect of attractiveness. Investor decisions were analyzed using generalized estimating equations to account for repeated measures and to control for individual risk propensity and demographic characteristics. Across outcomes, founders depicted as more attractive elicited higher expectations of venture success, larger investment amounts, and stronger expectations of reciprocity. These effects were robust and did not vary as a function of founder or investor sex. The findings advance signaling theory in entrepreneurial finance by demonstrating that non-diagnostic visual cues can systematically shape investor judgments when information is sparse and cognitive elaboration is constrained. In the image-forward, retail-investor context of ECF, facial attractiveness operates as a powerful platform-visible signal despite lacking intrinsic diagnostic value. Practically, the results suggest that platforms should surface diagnostic information earlier and consider debiasing prompts, while founders should complement professional imagery with verifiable signals of quality. More broadly, the study highlights the importance of ethics-by-design approaches to visual presentation in entrepreneurial finance environments involving retail investors.

This study examines the optimal legal entity framework for the sustainable development of commercial crowdfunding in Indonesia, with a focus on Equity Crowdfunding and Securities Crowdfunding. Employing a normative and conceptual legal methodology, it analyzes key regulations issued by the Financial Services Authority and assesses their coherence with the constitutional principle of economic democracy. The study contends that legal entity selection plays a critical role in ensuring legal certainty, accountability, and investor protection within crowdfunding ecosystems. It evaluates the suitability of various legal forms, including limited liability companies, cooperatives, foundations, and partnership structures, in facilitating profit-oriented fundraising while preserving market integrity. The analysis underscores the necessity of a clear regulatory distinction between social and commercial crowdfunding models. The findings demonstrate that optimizing legal entity structures is a strategic imperative to enhance fintech governance, expand MSME and startup access to capital, and advance inclusive growth in Indonesia’s digital economy

The rise of crowdfunding has transformed the funding landscape for startups, offering an alternative to conventional financing avenues. This study focuses on equity crowdfunding and investigates the dynamics of herding behavior among investors and its influence on campaign success. We analyze 680 equity crowdfunding campaigns from Wadiz, the largest platform in South Korea (2016–2021). In contrast to traditional funding, equity crowdfunding creates a two-sided market through its platform-based service, fostering interactions between entrepreneurs seeking funds and investors seeking opportunities. The time-limited nature of campaigns further encourages sequential decision-making and potential herding behavior. Unlike prior studies that have predominantly emphasized entrepreneurial and campaign-related factors, this study highlights the pivotal role of investor behavior, recognizing fellow investors as valuable signaling entities within the platform. Using OLS regression, logistic regression, interaction analysis, and Propensity Score Matching (PSM), we find that early participation by professional investors increases the odds of campaign success by approximately 14%. Furthermore, the effect is more pronounced in the IT industry, where information asymmetry is especially severe. Our findings demonstrate the signaling role of professional investors in mitigating information asymmetry and improving campaign outcomes, providing actionable insights for entrepreneurs, investors, and platforms in the evolving landscape of equity crowdfunding.

Religious Investors and Equity Crowdfunding Success

Pathways to success in equity crowdfunding for sustainable startups: A configurational perspective

Research background: The majority of research on equity crowdfunding concerns its evolution in developed countries. There are still relatively few works devoted to equity crowdfunding in developing regions, including Poland. Taking this into account and the lack of research on the effectiveness of ECF-based IPOs, there is a research gap that this article is trying to fill. This paper also contributes to the extensive literature dealing with the occurrence of the IPO underpricing phenomenon and focuses on a regional study on IPO underpricing in the still niche ECF-based IPOs. Purpose of the article: The article aims to show the development of equity crowdfunding in Poland. The article also aims to (i) evaluate the effectiveness of debuts of companies that raised funds (and thus carried out their IPOs) using ECF platforms, and (ii) find the determinants of ECF-based IPOs performance. Methods: The model for testing the potential determinants of ECF-based IPO performance is based on univariate linear regressions measuring the relationship between a dependent variable which stands for ECF-based IPO underpricing and one independent variable (chosen from a set of potential explanatory variables. Findings & value added: The article shows that since 2020 ECF has become an important source of financing for listed SMEs in Poland. Based on the stylized fact on the risk-return tradeoff, it is assumed that ECF-based IPOs are more underpriced than IPOs of other companies to attract investors. The paper revealed that the effectiveness of ECF-based IPOs has mainly the cyclical nature and it depends on the stock price cycle. ECF-based IPOs are more underpriced then other IPOs only in the bull market while in the bear market they are more overpriced. To the best of my knowledge, this is the first study to explore the performance of ECF-based IPOs. Although this paper focuses on Poland, it opens the potential for broader global research in this area. The article can also hold significant practical value for all participants of the ECF market.

The rapid expansion of equity crowdfunding in Türkiye has revealed a significant demand from investors for Shariah-compliant opportunities. However, the absence of a formal Shariah governance framework has created critical vulnerabilities, including erosion of trust, information asymmetry, a clear legal void and ambiguity of liability, inadequate due diligence, reputational and sustainability risks, unnecessary operational burden, voluntary financial exclusion, and systemic risk, which undermine the integrity of this emerging market. This study addresses this governance deficit through a qualitative analysis grounded in a critical literature review. Its primary contribution is twofold: first, it systematically maps the specific Shariah governance challenges inherent in Türkiye's crowdfunding ecosystem; second, it proposes three distinct, practical governance models to resolve them. These models are: (1) the Two-Tier Shariah Governance Model, which establishes a central authority and specialized platforms; (2) the Hybrid Model, which integrates an "Islamic window" into existing platforms; and (3) the Outsourced Shariah Governance Model, which standardizes third-party compliance verification. The implementation of any of these frameworks would institutionalize trust, mitigate risk, and foster the sustainable development of equity crowdfunding in Türkiye, serving as a template for other jurisdictions facing similar challenges.

Equity crowdfunding provides entrepreneurs and founders an opportunity to raise funds from large number of audience in which each investor provide small amount, instead of large amount from small group of professional investors. Early research focused on success drives of equity crowdfunding but this study explores the quality signals that affect the investors’ investment decision and help entrepreneurs to achieve overfunded campaign success in equity crowdfunding. Based on signaling theory, we develop a research model to conduct an empirical study using quantitative data collected from UK based world largest equity crowdfunding platform, Crowdcube. Findings show that quality signals have positive significant effect on investors’ investment decision. It means that investors’ behavior is same while making investment decision in equity crowdfunding as in conventional investment settings. Investors read quality signals in equity crowdfunding as well and choose those crowdfunding campaigns that are with high magnitude of quality signals. These results confirm that investors always evaluate investment opportunities in terms of business potential by analyzing quality signals in conventional investment opportunities as well as in equity crowdfunding.

This study investigates how project radicalness, team creativity, and intellectual property influence the success of equity crowdfunding (ECF) campaigns. Using fuzzy-set Qualitative Comparative Analysis (fsQCA) on a sample of 42 campaigns from Italian ECF platforms, we explore the configurations of innovation-related dimensions that lead to successful fundraising outcomes. Our findings reveal that no single factor guarantees success. Rather, specific combinations of innovation dimensions are crucial. These results support a contingent perspective and offer practical insights for campaign designers and platform managers seeking to optimise innovation signalling in ECF.

Entrepreneurs’ optimal decisions in equity crowdfunding campaigns

Abstract The equity crowdfunding literature tends to treat investors as a homogeneous group, assumed to be using similar decision-making criteria when considering investment. Those acknowledging heterogeneity often derive investor types from cluster analyses using platform-level data, which combines behavioural indicators with explanatory factors that may yield unstable, sample-specific groupings. In this study, we adopt Olsson’s (2021) typology as a theoretical baseline, classifying investors by two observable behavioural dimensions, average investment amount and portfolio breadth. However, we operationalise this framework empirically and analyse variations in investor decision-making. Drawing on 14,130 investment decisions by 8732 investors on the Israeli platform PipelBiz, we identify four types with distinct decision profiles: Friends and Family, Hobby Retail Investors, Niche Interest Angels, and Speculative Angels. The groups differ in their responses to minimum ticket size, equity offered, campaign round, business model, and team traits. Our analyses reveal that different types of investors weigh campaigns’ informational cues differently, highlighting segment-specific preferences, motivations, and decision-making rules. The results contribute to the growing body of literature on the heterogeneity of equity crowdfunding investors and its implications, while providing evidence that challenges the notion of a one-size-fits-all approach in the context of equity crowdfunding investors. The findings offer practical guidance for entrepreneurs and platforms seeking to target, design, and sequence campaigns to attract specific investor segments and improve fundraising outcomes.

Benchmarking equity crowdfunding attractiveness: Evidence from the G20

This study investigates the start-up firm’s optimal decision in multi-round equity and debt portfolio crowdfunding financing and the design of risk-sharing mechanism. A crowdfunding platform serves as an intermediary between a start-up firm with limited initial capital and external investors seeking debt and equity investments. When the funding target is not met, the crowdfunding platform provides loans to bridge the start-up firm’s capital gap, which also gives chance to adjust its capital structure. Firstly, a decision-making model is established to derive optimal financing strategies for a startup firm and a crowdfunding platform, while also derived the financing ratio between equity and debt crowdfunding channels. A numerical analysis further examines how key parameters—such as fundraising rate and loan interest rate—affect the startup’s capital structure. More importantly, a novel debt-to-equity swap arrangement (DTE) is proposed for sharing debt risk between the start-up firm and the platform. The findings reveal that startup firms primarily rely on equity crowdfunding when the fundraising rate is moderate, while the low fundraising rate leads to a single equity crowdfunding approach. Similarly, the high loan interest rate drive startup firms to favor equity crowdfunding, whereas low rates may prompt platform to discontinue loans, leaving startup firms to rely solely on equity financing. Additionally, the DTE facilitates coordination among parties requires balanced adjustments from platforms (moderate commission rates), startup firm (capital structure optimization), and investors (appropriate success rates) to ensure effective risk-sharing and profit distribution.

ABSTRACT Contrary to the mainstream view that crowdinvestors make investment decisions for utilitarian motives like financial returns, this study suggests that making an investment decision in equity crowdfunding is multifaceted. Drawing on Self‐Determination Theory and incorporating insights from Prospect Theory, the research is based on 15 semi‐structured interviews with crowdinvestors from the US and Europe, representing nine equity crowdfunding portals. With the aim of exploring the psychological dimensions underpinning the motivation in their investment decisions, through a combination of thematic and framework analysis, the study found that psychological dimensions of motivation like personal agency, eudaimonic well-being and self-transcendence influence the decision to participate in equity crowdfunding fostering self-efficacy, self-actualisation and social wellness; that is, they provide a sense of self-endorsement to take on the risk associated with an investment choice. The study proves that such self-validation acts as a form of cognitive reappraisal to make decisions in uncertain contexts. It contributes to literature by extending prior applications of Self-Determination Theory to equity crowdfunding through new empirical insights on the psychological factors behind investor motivations. Also, the study for the first time combines SDT with Prospect Theory while providing actionable insights for leveraging communication tools that foster investor agency and active participation.

This study investigates the impact of equity crowdfunding on significant infrastructure projects in Indonesia, with a focus on those that fall under the regulatory framework outlined in POJK No. 37/POJK.04/2018. It addresses the following research question: How does equity crowdfunding contribute to Indonesia's infrastructure financing? Its narrow focus on the use of crowdfunding for infrastructure fills a gap in the literature, which often lacks empirical research unique to Indonesia. Using a mixed-method approach that combines qualitative insights from stakeholder interviews with quantitative analysis of crowdfunding data, the study finds that although equity crowdfunding has the potential to mobilize capital for infrastructure, obstacles include investor protection, regulatory compliance, and project scalability. The study emphasizes the crucial role of regulatory frameworks and specially designed financial products in determining the outcomes of crowdfunding. In the end, the study recommends changing policy to create an atmosphere that is favorable to crowdfunding, improving financial, and aiding Indonesia's sustainable development goals.

Investor characteristics can influence preferences for entrepreneurial investment opportunities, with gender playing a crucial role. Using webcam-based eye-tracking, this study examines the attentional mechanism underlying gender homophily, a tendency to prefer projects led by entrepreneurial teams of one’s own gender, in equity crowdfunding (EC). Results confirm gender homophily among female investors, who fixate more quickly and look longer at entrepreneurial teams’ gender composition. Such a tendency is moderated by their financial knowledge with inexperience females showing a stronger effect. These findings support a top-down attentional control process, where attention is guided by goal-oriented selection of specific information rather than a bottom-up, stimulus-driven response. Mediation analyses further reveal that increased attention towards female-led teams significantly influences female investors’ investment preferences, linking attentional biases to decision outcomes. Male investors do not exhibit comparable gender-based effects. This study advances the understanding of how selective signal processing, shaped by investors’ endogenous characteristics such as gender and financial knowledge, influences investment decisions. Our results offer new insights into gender dynamics in entrepreneurial finance, elucidating the cognitive foundations of investor behavior and offering practical implications for EC platform designs and financial literacy interventions.Supplementary InformationThe online version contains supplementary material available at 10.1038/s41598-025-25732-8.