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Crowd-based feedback and early-stage entrepreneurial performance: Evidence from a digital platform

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  • Quignon, Aurelien

Abstract

The ability to identify early-stage venture potential, which has traditionally relied on experts, is challenging because new ideas are uncertain. However, judgment from a large number of evaluators can effectively identify promising ventures. This paper empirically studies whether crowd-based information generates informative feedback for entrepreneurs and seed investors. Using data on 701 early-stage founders of new ventures examined by 2600 evaluators, I estimated the effects of crowd-based ratings on survival and securing seed funds. I find that the crowd rating was uncorrelated with subsequent financing events from seed investors but increased a venture's probability of continuation by 3.1 percentage points. This effect became stronger as the number of evaluators increased. This finding highlights that a judgment aggregation offers information for nascent venture founders.

Suggested Citation

  • Quignon, Aurelien, 2023. "Crowd-based feedback and early-stage entrepreneurial performance: Evidence from a digital platform," Research Policy, Elsevier, vol. 52(7).
    • Handle: RePEc:eee:respol:v:52:y:2023:i:7:s0048733323000768
    DOI: 10.1016/j.respol.2023.104792
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    More about this item

    Keywords

    Crowd rating; Entrepreneurial uncertainty; Feedback; Early-stage ventures;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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