Social Threat Framing on the Fundraising Performance: Evidence from Equity-based Crowdfunding Firms

In this study, we seek to investigate the impact of a firm’s social threat framing on its fundraising performance in equity-based crowdfunding. Crowdfunding ventures have growingly committed to social initiatives to attract investors. However, the success crucially depends on how much the investors value the prosocial cues presented in the proposal. Drawing on the perspective of threat framing, we argue that firms’ framing of social issues as a societal threat in their crowdfunding proposals promotes the fundraising performance. A social threat framing increases perceived importance of the firm’s business and sustainability initiatives in the eyes of investors by developing a sense of urgency and commitment towards the social issues. Using a sample of 229 U.S. equity crowdfunding firms from 2015 to 2021, we found a significant positive relationship between social threat framing and the fundraising performance. We also examined some conditional variables for such an effect, such as firm characteristics and the linguistic styles used in the crowdfunding proposals.