Swaying equity crowdfunding investors: A configurational investigation of signals and narratives

Small individual investors on equity crowdfunding (ECF) markets, though constrained by bounded rationality and limited expertise, have become a major source of new venture financing. Integrating the cognitive perspective of signaling and the literature on narratives, we adopt a configurational approach to explore how new ventures attract ECF investors with combinations of signals embedded in entrepreneurial narratives. By tracking and scraping a leading UK-based ECF platform daily between November 2022 and August 2023, we constructed a dataset of 98 new ventures that raised external capital, which we analyzed via Qualitative Comparative Analysis (QCA). The results show distinct configurational patterns of signals, narratives, and ECF performance: pre-market and post-market ventures attract ECF investors with qualitatively different combinations of signals, which are embedded in entrepreneurial narratives with varying degrees of specificity and/or coherence. We therefore contribute to the literature on entrepreneurial finance, signaling and narratives with a configurational understanding of signals, narratives and new venture financing, which can also assist entrepreneurs at different stages in creating compelling campaigns for better fundraising performance.