Research On The Entrepreneurial Financing Strategies From The Perspective Of Crowdfunding Signal Transmission

With the flourishing of Internet finance,crowdfunding as a new financing tool is gaining popularity.The foreign crowdfunding platforms such as Kickstarter,Indiegogo and the domestic platforms such as Demohour,36 Kr and Jingdong Crowdfunding etc.have built a perfect place to collect capital and wisdom of the crowd.However,given the current situation of start-ups in China,we found that crowdfunding alone can't be the solution to fund shortage for entrepreneurs during their early stages.Conventionally,it was thought that the entrepreneurs turned to crowdfunding only to collect money.But in fact,crowdfunding has a strong spill-over effect on the third party like venture capitalists.Moreover,besides connecting projects and financial resources through online platforms,crowdfunding is also a tool to report the potential size of the products by utilizing the re-ordering customer samples.There are still few studies about crowdfunding as a signaling tool,so this paper investigated the market verification function of crowdfunding and its “signal transmission” value.Introducing the crowdfunding outcome signal into the investor-investee cooperative game framework,the study discussed the financing path optimization and crowdfunding strategy planning.First of all,we compare the possibilities that the entrepreneur s get the funds from the VCs when they choose the direct financing path or signaling financing path,respectively to solve for the best financing path for entrepreneurs.The results sugg est that: when choosing the optimal financing path,the entrepreneurs shall have an estimation of their products' potential market.When the products only have a few potential consumers,then the entrepreneurs shall choose the signaling financing path.Otherwise,they shall choose the direct financing path.However,when the market size is not big enough nor small enough,they shall find the optimal path depending on the VCs' types.Secondly,to make a trade-off between the two functions of crowdfunding: information transmission and market excavation,we calculate the expected payoffs of the entrepreneurs and the VCs in direct financing path and signaling financing path,respectively.The results show that to ensure the participation of VCs,namely their payoffs are always positive,the entrepreneurs shall restrict the amount of money raised during the crowdfunding.So the entrepreneurs cannot anticipate an infinite growth of the amount of money raised during the crowdfunding.For the crowdfunding campaign has pre-exploited the potential markets of the product,“the more,the better” is not for the campaign.And perhaps the more reasonable way is to realize that “enough is enough”.