Journal of Entrepreneurship Research

Journal of Entrepreneurship Research

Identifying Factors Influencing the Participation of Individual and Institutional Investors in Business Crowdfunding Campaigns

Document Type : Research Article

Authors
Hamed Bashokouh Ajirlu
Mohammad Solgi
Department of Financial Management, Faculty of Management and Economics, Imam Hossein (AS) University, Tehran, Iran.
10.22034/jer.2025.2034946.1152
Abstract
Introduction: Securing adequate financial resources remains one of the most critical challenges confronting start-up ventures. Crowdfunding has emerged as a novel entrepreneurial financing mechanism, the success of which is contingent upon the interplay of investor behavior, platform characteristics, and project owners' attributes. This study aims to identify and prioritize the factors influencing the participation of both individual (retail) and institutional investors in crowdfunding campaigns.
Methodology: A mixed-methods approach (qualitative-quantitative) was employed to identify the influencing factors. In the qualitative phase, initial factors were extracted through a comprehensive review of theoretical literature and prior research, followed by semi-structured interviews with domain experts. Subsequently, in the quantitative phase, the finalized factors were identified and ranked using a fuzzy Delphi technique administered via a survey strategy.
Findings: The analysis revealed 22 basic themes, which were organized into five overarching organizing themes: entrepreneurial characteristics, project characteristics, crowdfunding platform characteristics, investor characteristics, and the macroeconomic environment. These were identified as the primary influencing factors. Ultimately, 21 themes were validated for individual investors, while 18 themes were confirmed for institutional investors. The findings further indicated that project profitability, risk tolerance, and political conditions constitute the most salient factors affecting individual investor participation. In contrast, parallel market returns, inflation, project risk, and collateral requirements emerged as the predominant determinants of institutional investor engagement.
Conclusion / Implications: This research offers actionable insights for crowdfunding platform managers seeking to enhance the likelihood of campaign success. Given that geographic location does not significantly influence investor participation, platforms can effectively source projects from across the country and mobilize both individual and institutional capital. Moreover, the findings underscore that platform managers should tailor their negotiation strategies accordingly: when engaging with institutional investors, emphasis should be placed on collateral structures, parallel market returns vis-à-vis project profitability, and project risk assessments. Conversely, when negotiating with individual investors, managers should prioritize project profitability, investors' risk tolerance, and comparative returns from alternative investment channels. By adopting such differentiated strategies, crowdfunding platforms can substantially improve their prospects for successful capital mobilization.
Keywords
Crowdfunding
Institutional Investors
Individual Investors
Start-up Ventures
Subjects
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  • Receive Date 23 July 2024
  • Revise Date 14 March 2025
  • Accept Date 18 March 2025