Signals of strategic intent: the impact of the disclosure of intended use of proceeds on equity crowdfunding investors’ decision-making

Abstract

Abstract The use-of-proceeds disclosure in fundraising activities plays a crucial role in shaping investor decision-making by providing transparency regarding capital allocation strategies. While traditionally associated with initial public offerings, we examine whether use-of-proceeds disclosure in equity crowdfunding campaigns similarly affects individual investor decision-making. Drawing on a sample of 7,151 investors across 35 equity crowdfunding campaigns between July 2018 and December 2020, we focus our primary analysis on the 1,915 repeat investors, while comparing their behavior with that of 5,236 one-time investors to examine gender-related patterns across groups. Our findings confirm that use-of-proceeds content is associated with the amount investors commit, their commitment relative to the campaign minimum ticket, and their investment timing. Investors exhibit a clear preference for growth-oriented allocations, while overhead-oriented disclosures are largely uninformative. We contribute to signaling theory by showing that Use of Proceeds declarations function as signals of intent, where both the act of disclosure and its specific content shape investor decisions. Beyond the use-of-proceeds, we document two distinct gender-related patterns. Female investors commit smaller absolute amounts and invest a smaller proportion relative to the campaign minimum ticket than male investors. Contrary to gender homophily, female one-time investors penalize ventures with higher female team representation more strongly than males, a differential that disappears among repeat investors, suggesting that platform experience attenuates gender-based evaluation differences. The findings advance the theoretical understanding of intent signals in alternative equity markets and offer practical guidance for entrepreneurs seeking to optimize their equity crowdfunding disclosure strategies.