Which Updates During an Equity Crowdfunding Campaign Increase Crowd Participation?

Start-ups often post updates during equity crowdfunding campaigns. Yet, little is known about the effects of such updates on funding success. We investigate this question using hand-collected data from 71 funding campaigns on two German equity crowdfunding portals. Using a combination of qualitative and quantitative empirical research techniques, we find that posting an update has a significant positive effect on the number of investments by the crowd and the investment amount collected by the start-up. This effect does not occur immediately in its entirety but is lagged by a few days. The positive effect increases with the number of words of the update. Distinguishing by the content of the update, we find that the positive effect can be attributed to updates about new funding and business developments as well as updates that inform about promotional campaigns run by the start-up. Updates about the start-up team, the business model, cooperation projects, and product developments do not show meaningful effects. Our paper contributes to the literature about the effects of information disclosure on equity crowdfunding success and helps start-ups to design effective and successful equity crowdfunding campaigns