Equity Crowdfunding: A New Phenomena

Abstract

Crowdfunding has recently become available for entrepreneurs. Most academic studies analyse data from rewards-based (pre-selling) campaigns. In contrast, in this paper we analyse 636 campaigns, encompassing 17,188 investors and 64,831 investments between 2012 and 2015, from one of the leading European equity crowdfunding platforms. We provide descriptive statistics and carry out cross-campaign regression analysis. The descriptive statistics address its size, growth and geographic distributions in the UK. The regressions analyse which factors are associated with the probability of a successful campaign. We find some similarities and some interesting dissimilarities when comparing the descriptive statistics and regression results to research on rewards-based crowding. The data show that equity crowdfunding will likely pose great challenges to VC and business angel financiers in the near future. We discuss some research challenges and opportunities with these kind of data.

The Schumpeterian entrepreneur: a review of the empirical evidence on the antecedents, behaviour and consequences of innovative entrepreneurship

“…As examples, consider crowdfunding in its various forms (e.g. Vulkan, Åstebro, and Sierra 2016), government VC (Grilli and Murtinu 2014), start-up accelerators, university-based seed funds, and IP-backed financial instruments. These new ways of financing can complement or substitute traditional ways of entrepreneurial finance such as business angel, VC, or bank-based ways of financing (e.g.…”

Working the crowd: Improvisational entrepreneurship and equity crowdfunding in nascent entrepreneurial ventures

“…Four main categories of crowdfunding exist: rewards, donation, lending and equity crowdfunding (Vulkan, et al, 2016). To date, research has focused upon the rewards-based model synonymous with the US firm Kickstarter and donation crowdfunding (Gerber et al, 2012;Colombo et al, 2015;Mollick, 2014;Giudici et al, 2017) 1 , however the concept has rapidly expanded both in terms of format and geography (Hemer, 2011;World Bank, 2013;Lin and Viswanathan, 2015;Short et al, 2017).…”

“…To date, research has focused upon the rewards-based model synonymous with the US firm Kickstarter and donation crowdfunding (Gerber et al, 2012;Colombo et al, 2015;Mollick, 2014;Giudici et al, 2017) 1 , however the concept has rapidly expanded both in terms of format and geography (Hemer, 2011;World Bank, 2013;Lin and Viswanathan, 2015;Short et al, 2017). In recent years increasing academic interest is being shown in equity crowdfunding -a prominent source of finance for nascent entrepreneurial ventures (Collins and Pierrakis, 2012;Ralcheva and Roosenboom, 2016;Vismara, 2016b;Block et al, 2016;Vulkan et al, 2016) originally rather narrowly defined as "a model in which crowdfunders receive a financial compensation" (Belleflamme et al, 2014, p. 317). Ahlers et al (2015, p. 958) offer a more permissive definition of crowdfunding as "a method of financing, whereby an entrepreneur sells a specified amount of equity or bond-like shares in a company to a group of (small) investors through an open call for funding on Internet-based platforms".…”

“…Unlike rewards or donation models, which are largely deregulated, equity crowdfunding requires regulatory approval to operate and was thus, initially the smallest form of crowdfunding, comprising just 5% of all crowdfunding investment by 2013 (Vulkan et al, 2016).…”

A tulajdonosi tőke alapú közösségi finanszírozás

“…Ez a trend rávilágított a tulajdonosi tőke alapú finanszíro-zás aktualitására és lehetőségeire, ami a nemzetközi szakirodalomban új kutatási irányokhoz is vezetett. A tulajdonosi tőke alapú közösségi finanszírozás (equity-based crowdfunding, a továbbiakban ECF) valószínűsíthetően nagy kihívásokat fog jelenteni az üzleti angyaloknak és kockázati tőkéseknek a közeljövőben (Vulkan et al 2015). A tulajdonosi tőke alapú közösségi finanszírozás során az interneten keresztül vállalkozók nyílt felhívást tesznek részvényszerű üzletrészeik értékesítésére a vállalaton belül abban a reményben, hogy így nagy számban képesek befektetőket bevonzani.…”