A groundbreaking study conducted by researchers from the University of East Anglia (UEA) offers new insights into the complex dynamics that influence investor behavior in equity crowdfunding campaigns. By meticulously analyzing data from over a thousand successful campaigns hosted on the Seedrs platform, the research team has distilled critical factors that can substantially enhance the likelihood of attracting funding. This study represents a significant stride in understanding how financial targets, team composition, equity offerings, and linguistic choices interact to influence investor decisions in the burgeoning field of equity crowdfunding.
At the heart of the investigation lies the notion of an optimal fundraising target—a “sweet spot”—which the analysis identifies as approximately £90,000. The data suggests a behavioral threshold wherein investors are inclined to support campaigns aimed at this financial goal, yet tend to shy away when targets exceed it. This phenomenon may be rooted in perceived risk and manageability; targets that are too high could intimidate potential investors, raising doubts about the feasibility or ambition of the project. Understanding this financial sweet spot provides entrepreneurs with a vital strategic lever to calibrate their fundraising goals realistically and attractively.
The composition of the business team behind a start-up emerges as another decisive factor shaping investment outcomes. Campaigns associated with startups boasting around 19 team members showcased greater fundraising success. This finding reflects the complex balance between operational capacity and interpersonal dynamics within growing ventures; while smaller teams might struggle with limited skill sets and bandwidth, excessively large teams risk internal conflicts that could detrimentally affect progress and investor confidence. The nuanced optimum team size underscores how social and organizational complexities can influence financial success.
A particularly intriguing discovery revolves around the equity percentage offered to external investors. Contrary to conventional wisdom and prior empirical studies—which often suggest that a higher equity offer might diminish perceived value and control—this study finds that a substantial equity share is a compelling attractor for investors. A low equity offer may inadvertently signal that external contributors are considered marginal to the project’s success, or worse, that the company valuation is inflated beyond reasonable expectations. This insight transforms prevailing assumptions and encourages entrepreneurs to reevaluate how they communicate the importance of investor stakes within their business equity structures.
The power of language within one-paragraph campaign pitches was also evaluated for its influence on fundraising effectiveness. Campaigns embedding terms such as “health” and “organic” experienced increased success in securing funds, signaling that investors respond positively to narratives linked with these trending, value-driven sectors. Conversely, pitches utilizing words like “entertainment” and “information” tended to underperform. This linguistic pattern suggests an emerging investor preference for ventures that align with contemporary societal priorities on wellness and sustainability, reflecting broader cultural and economic shifts.
Methodologically, the study employed truncated regression analysis on a robust dataset spanning 1,189 crowdfunding campaigns. This analytic approach allowed the researchers to control for the inherent limitations and biases in observable funding amounts and targets, facilitating accurate identification of causal relationships between campaign features and financial outcomes. By integrating econometric rigor with real-world data, the researchers ensured both scientific validity and practical relevance in their findings.
The implications of this study extend beyond mere academic inquiry. Entrepreneurs can leverage these insights to strategically design their crowdfunding campaigns, precisely tuning financial targets to resonate with investor psychology, cultivating appropriately sized and skilled teams, and intelligently crafting their equity offerings to foster investor engagement. Moreover, the deliberate use of resonant language in marketing pitches holds potential to significantly enhance campaign visibility and appeal, translating to higher success rates in an intensely competitive funding environment.
This comprehensive research project was a collaborative effort between the University of East Anglia and the University of Manchester. By pooling expertise in econometrics and business analysis, the team underscored the interdisciplinary nature of modern entrepreneurship research. Their findings, published in the prestigious Bulletin of Economic Research, mark an important milestone in the ongoing quest to decipher the underpinnings of successful equity crowdfunding.
Notably, Professor Peter Moffatt of UEA emphasized the psychological importance of investors feeling they are making a meaningful contribution. This emotional engagement, fostered by a generous equity share and realistic targets, may help counterbalance traditional mistrust and risk aversion in the crowdfunding domain. The phenomenon challenges simplistic interpretations of investor motivations and invites deeper exploration into the nuanced interplay between rational evaluation and affective investment.
Furthermore, the study sheds light on the delicate balance between team size and functionality in start-ups. Small teams can encounter operational bottlenecks due to resource constraints and limited competencies, while larger groups might be prone to internal disputes that hamper decision-making and cohesion. This research clarifies that an intermediate team size optimizes managerial capability whilst maintaining harmony, providing a practical guidepost for fledgling ventures seeking effective organization.
The preference for incorporating health-oriented and organic themes within campaign narratives aligns with growing consumer and investor interest in sustainability, wellness, and ethical business practices. This trend highlights the evolving cultural values that permeate financial markets and underscores the importance of aligning entrepreneurial communication strategies with emerging societal priorities.
In conclusion, this study delivers a multifaceted examination of the determinants shaping equity crowdfunding success. Its findings challenge prevailing assumptions while providing actionable intelligence for entrepreneurs aiming to maximize funding potential. By refining target amounts, deploying strategic team structures, offering compelling equity stakes, and adopting value-conscious language, business start-ups can enhance their appeal and forge stronger connections with investors in the digital age.
Subject of Research: Behavioural determinants influencing investor attraction in equity crowdfunding campaigns
Article Title: Determinants of Amount Raised in Equity Crowdfunding Campaigns; an Application of Truncated Regression
News Publication Date: 12-Nov-2025
Web References: https://research-portal.uea.ac.uk/en/persons/peter-moffatt/
References: Ma, Xuerui; Moffatt, Peter; Peters, Simon. “Determinants of Amount Raised in Equity Crowdfunding Campaigns; an Application of Truncated Regression,” Bulletin of Economic Research, 12-Nov-2025.
Keywords: Equity Crowdfunding, Investor Behaviour, Campaign Targets, Team Size, Equity Percentage, Campaign Language, Econometrics, Start-Ups, Seedrs, Fundraising Strategies
