Hot or not – Which features make FinTechs attractive for investors?

Johannes Klein, University of MuensterFollow
Leonard Stuckenborg, University of MuensterFollow
Jens Leker, University of MuensterFollow

Abstract

Attracting investors and generating funding is a key issue for all start-ups. The information asymmetries between investor and start-up need to be reduced. Despite the overwhelming literature on venture capital financing and different signals reflecting venture quality, pinpointing the signals which impact funding decisions remains an open issue. This study presents an empirical examination of the effectiveness of different signals to convince investors and generate funding. We examine the impact of signals concerning venture quality (classic ones such as human capital, intellectual capital and social alliance/network capital as well as the strategic orientation in terms of business model patterns. Based on a comprehensive sample of more than 101 German FinTechs, our study delivers empirical evidence that human capital as well as the strategic orientation positively impacts a FinTech’s attractiveness. However, our chosen measures for intellectual capital and social network/alliance capital result in negative effects.

JEL Codes

M13, G24, L26

Keywords

Alliance capital, Intellectual capital, human capital, Strategic Orientation, FinTechs, Funding

Recommended Citation

Klein, Johannes; Stuckenborg, Leonard; and Leker, Jens (2020) "Hot or not – Which features make FinTechs attractive for investors?," The Journal of Entrepreneurial Finance: Vol. 22: Iss. 1.
DOI: https://doi.org/10.57229/2373-1761.1372
Available at: https://digitalcommons.pepperdine.edu/jef/vol22/iss1/1