Too Gloomy to Invest: Weather-induced Mood and Crowdfunding

Do investors' moods influence their contributions to risky investments in equity crowdfunding? Yes. We use cloud cover as a proxy for mood because besides serving as powerful mood stimulus, changes in weather are plausibly exogenous and orthogonal to attributes of crowdfunding campaigns, yielding an advantageous identification strategy. Our results, based on data from Companisto – one of the largest European equity crowdfunding platforms, indicate that change in sky cloud cover from zero to full reduces each investor's contribution amount by about 10–15% (across different specifications). Our paper highlights the broader role of financiers' moods and emotions in providing valuable financial resources to entrepreneurs.