Trust Signals: Professional Investors’ Influence in Equity Crowdfunding Decisions

Purpose: This paper examines whether professional investors function as credible informational signals in equity crowdfunding (ECF) campaigns, and investigates the mechanisms through which their participation influences campaign success. Drawing on signaling theory, the study tests both the direct association between professional investor presence and campaign success and the indirect pathway operating through non- professional investor mobilization. Methodology: The study adopts a quantitative methodology applied to a sample of 202 ECF campaigns concluded on the CrowdFundMe platform between 2016 and 2024. A logistic regression model estimated with heteroscedasticity-robust (HC1) standard errors is used to test H1, while regression-based mediation analysis with Sobel test is employed to formally test H2. An OLS regression with capital raised as the dependent variable is reported in Appendix A as a robustness check. Findings: The total effect of professional investor presence on campaign success is positive and statistically significant, providing support for H1. However, the direct effect becomes non-significant once non-professional investor participation is introduced as a mediator, consistent with full mediation. The indirect pathway (professional investor presence → non-professional investor participation → campaign success) is statistically significant, providing strong support for H2. These results indicate that, in this setting, professional investors influence campaign outcomes primarily through their capacity to attract non-professional investors, with no significant residual direct effect on campaign success. Originality/Value: This study contributes to the literature on entrepreneurial finance and signaling theory in three ways. First, it formally isolates the mediation mechanism through which professional investor presence translates into campaign success, moving beyond reduced-form associations documented in prior work. Second, it introduces a qualitatively distinct conceptualization of the professional investor signal, grounded in the institutionally verified category of sophisticated investors established under Regulation (EU) 2020/1503 and CONSOB Regulation No. 22720. Third, it addresses the specific role of professional investors as a distinct signaling category within the Italian ECF market, a setting that has attracted growing scholarly attention but where this mechanism remains largely unexamined, thereby extending the contextual scope of signaling theory in entrepreneurial finance. Practical and theoretical implications: From a theoretical perspective, the finding of full mediation advances understanding of how certification signals operate in ECF markets: professional investors function as credibility anchors whose value, in this setting, lies primarily in their crowd mobilization capacity. From a managerial and policy perspective, the results suggest that strategically engaging professional investors early in the fundraising process can stimulate broader non-professional participation and improve the overall probability of campaign success. Platforms and policymakers may benefit from enhancing the visibility and transparency of professional investor involvement in ECF campaigns.