How Complementors Use Quality Signal in Platform: Evidence of the Moderating Effects of Platform Design in Equity Crowdfunding Platform

Technological platforms enable participants to connect various resources across markets. Like other platforms, the equity crowdfunding platforms(ECFPs) is beneficial for startups (as complementors) seeking financial resources. However, the problem of information asymmetry hinders high quality startups from obtaining fund from crowd. Thus, they are more likely to obtain costly signal. In this paper, we emphasized startups’ trust capital as a critical and costly signal in ECPFs. In addition, we examine how ECPFs’ ‘platform design’ reinforce the relationship between startups’ trust capital and fundraising performance. Based on Korean equity crowdfunding data from 2016 to 2018, this paper provides the quantitative evidence regarding how startups(complementors) use quality signal and how platform design moderates the relationship.