Lead investor and Financing Performance on Equity Crowdfunding Platforms

Equity crowdfunding provides a new channel for enterprise project financing. I found that most equity crowdfunding projects in China have adopted the leader-follower investor paradigm, which is considered as a way to alleviate information asymmetry. To explore the impact of the lead investor on financing performance, based on the data of the equity crowdfunding platform from 2014 to 2020, I used OLS regression to conduct an empirical study. The results show that the existence of lead investors promotes equity crowdfunding performance, and the attention to projects plays a mediating role. Project risk weakens the positive effect of lead investors on financing performance. The study further found that if the lead investors are individuals instead of institutions, the financing performance is better. The lead investment amount and the information completeness of the leading investors have a positive effect on financing performance, while whether the leading investors use real names has no effect on financing results. Structural social capital, relational social capital, and regional social capital all play a positive role in promoting financing level, and the lead investment amount negatively regulates the positive effect of social capital on financing performance. Finally, I chose the propensity score matching (PSM) method to avoid endogenous problems, and then replaced the dependent variable and used logistic and probit models to ensure the robustness of the conclusions.