Why Equity Crowdfunding Investors Reject Opportunities: An Exploration of Negative Attributes

This study examines investors’ rejection criteria in equity crowdfunding, an under-researched area, through the lens of Elimination-By-Aspects and Prospect Theories. Using real-time Verbal Protocol Analysis with a proprietary simulated equity crowdfunding platform, we found that rejection decisions were primarily driven by loss aversion and sequential elimination of alternatives. We identify nine deal-killer criteria, including high share prices, lack of transparency, low market potential, and strong future competitors, which trigger immediate campaign rejection. Our findings reveal notable similarities with the rejection criteria employed by traditional equity investors, such as business angels and venture capitalists, as well as by stock market and IPO investors, suggesting that decision patterns transcend investment contexts. This study contributes to theory by extending cognitive decision-making frameworks to the equity crowdfunding context and offers practical implications for entrepreneurs and platform managers, alongside propositions for future research.