Equity crowdfunding: First resort or last resort?

Abstract

Prior research has focused on the factors that affect funding success on equity crowdfunding platforms, but a detailed understanding of the factors that drive firms to search for equity crowdfunding in the first place is lacking. Drawing on the pecking order theory, we argue that firms list on equity crowdfunding platforms as a -last resort‖-that is, when they lack internal funds and additional debt capacity. In line with the pecking order theory, the empirical evidence shows that firms listed on equity crowdfunding platforms are less profitable, more often have excessive debt levels, and have more intangible assets than matched firms not listed on these platforms. We discuss the implications for theory and practice.

It’s a Peoples Game, Isn’t It?! A Comparison Between the Investment Returns of Business Angels and Machine Learning Algorithms

“…Using the internet archiving tool Wayback Machine, 7 which regularly stores versions of publicly accessible websites, we inferred each of the focal ventures' time of death. The Wayback Machine has been used extensively in management and entrepreneurship research to investigate archived website Funk, 2014;Scott et al, 2020;Walthoff-Borm et al, 2018;Wry et al, 2014). If a venture was still alive, we inferred that a new venture was surviving until the end of our study period (i.e., right-censoring data), which is a common approach in survival analysis.…”

Determinants of equity crowdfunding success

“…Reference [10] show in the sample of the UK's equity crowdfunding platform Crowdcube that the motivations of start-ups to engage in this type of financing is in align with the pecking order theory. No matter if we look at the corporations listed on some stock exchanges or seed companies, they always use equity as a last resort.…”

Financing Italian Firms Throught Invoice Trading Platforms

“…Today, various platforms offer digitalized services to firms in the area of factoring, invoicing, leasing, and crowdfunding (Gomber et al, 2017). The largest number of academic papers deals with crowdfunding (Belleflamme et al, 2014;Chemla & Tinn, 2019), expecially in the equity-based form (Vismara, 2016;Vulkan et al, 2016;Walthoff-Borm et al, 2018); other contributions mainly attempt to analyze both the positive and negative impacts that alternative finance may have on users. Academics are fairly consistent in affirming that the transformative developments in the financial services industry will most likely improve and expand access of firms and individuals to finance (Ketterer, 2017).…”