The Importance of a Good Start: How Large Early Investments Shape Funding Dynamics in Equity Crowdfunding

We examine how large investments from early investors shape funding dynamics in equity crowdfunding. Using investor-level data drawn from two Chinese equity crowdfunding platforms (Dreammove and Ifwolf), we find that large early investments significantly increase the amount pledged by subsequent investors in the same project. Specifically, investors pledge 13% more to projects that have received a prior large investment compared to those that have not. We also find that the effect intensifies with the number of large early investments and the number of days they occurred, and is stronger for angel investors than for crowd investors. Finally, we show that the effect strengthens when alternative signals of venture quality are weak. Overall, our findings reveal the mechanisms through which large early investments function as a key signal, highlighting the importance of a good start in equity crowdfunding. © 2025 Accounting and Finance Association of Australia and New Zealand.