Seeking Equity Crowdfunding Backers? Take A Look At Your Company Logo

Company logos may not foretell a venture’s profitability, but they could help garner backing on equity crowdfunding platforms, especially if investors perceive them as complex, new research suggests.

Previous studies have indicated that cues strongly associated with a startup venture’s potential success – signals such as patent ownership, the size of the equity raise and the founders’ education and network – influence crowdfunding investors.

Now a research team from Canada, France and the UK suggests that the company logo, while a more tenuous visual cue, can sway crowdfunding backers’ investment decisions as well.

Company logos pervade crowdfunding platforms, but little is known about the effects of such visual cues on investor behavior, they write.

The team, after conducting a survey, a field study and an experiment, report that backers appear to interpret logo design complexity as a signal of a venture’s innovativeness, and invest more in companies with more complex logos.

They presented their findings in an article, “What’s in a logo? The Impact of complex visual cues in equity crowdfunding,” in the January 2019 edition of the Journal of Business Venturing.

The authors say they found support for their idea that crowdfunding investors process visual cues automatically as a mental shortcut to  help form their thoughts on early-stage entrepreneurial ventures – with more complex logos creating more favorable perceptions and drawing more funds.

“Increasing logo complexity can increase the amount of funds invested in ventures,”  they conclude.

Investors may see more complex logos as a sign of innovativeness because the images are more difficult to process, “and thus, feel

Keep reading this article on Forbes Small Business.