Overshooting in Startup Fundraising: A Doomed Bubble or a Great Lie?

Jiayi Bao, Business Economics and Public Policy, The Wharton School

Abstract: Fundraising for early-stage startups has become increasingly easier with the rise of crowd-funding platforms. This project asks how an entrepreneur can set his or her targeted goal to attract more investor money. On one hand, a goal target may serve as an anchoring point for investors and signal subjective valuation about an entrepreneurial project, leading to an incentive to overstate. On the other hand, an overstated goal may backfire due to a potential starting problem in the goal completion process. We explore these two competing effects for startup fundraising in a crowdfunding setting and evaluates the validity of overshooting as a potential fundraising strategy. We address Mack Institute’s research priority of strategies for innovating as we study how startups strategize for acquiring the financial capital essential to their survival and innovative processes.

Michelle Eckert is Marketing and Communications Coordinator for the Mack Institute, where she works to engage students, researchers, and corporate partners in opportunities for collaboration. Michelle received her B.A. in Art from Valparaiso University in 2007. Her background includes two AmeriCorps terms of service working to teach mathematics, computer literacy, and job readiness skills to out-of-school youth in Philadelphia, focusing particularly on promoting access to post-secondary education.