Unsuccessful Equity Crowdfunding Offerings and the Persistence in Equity Fundraising of Family Business Start-Ups

Abstract

Little is known about what happens after an unsuccessful equity crowdfunding campaign. Taking a socioemotional wealth perspective, we hypothesize that family business start-ups are more likely to eventually still raise equity financing relative to nonfamily business start-ups. Moreover, while family business start-ups are initially less likely to provide voting rights, we hypothesize that they are more likely to offer shares with voting rights after an unsuccessful campaign. Using data on the UK equity crowdfunding market, we find support for our hypotheses. This study adds novel insights into the nexus between equity crowdfunding and family business literature.

After successful fundraising: how overfunding and category spanning affect the release and audience-perceived quality of crowdfunded products

“…Our study is one of the first to connect overfunding to the outcomes of crowdfunded product development and thus contributes to the emerging stream of research that illuminates the post-crowdfunding stage of entrepreneurial ventures (e.g., Murray & Fisher, 2022;Pollack et al, 2021;Rossi et al, 2022;Vanacker et al, 2019). It offers novel theoretical predictions for, and empirical evidence on, the surprising observation that more fundraising success does not consistently lead to more success in terms of product release and product quality.…”

“…An emerging stream of research has thus started to investigate post-crowdfunding stage of entrepreneurial ventures (Mollick & Kuppuswamy, 2014;Vanacker et al, 2019). This research has so far primarily studied the impact of crowdfunding campaigns on follow-on funding as well as the long-term viability and success of crowdfunded ventures (e.g., Rossi et al, 2022;Signori & Vismara, 2018;Walthoff-Borm et al, 2018). At the same time, scholars have called for a closer investigation of how fundraising outcomes impact product-development outcomes after a successful crowdfunding campaign (Pollack et al, 2021;Stanko & Henard, 2017;Vanacker et al, 2019).…”

“…In addition, an emerging stream of research has started to investigate what happens after a crowdfunding campaign (Mollick & Kuppuswamy, 2014;Vanacker et al, 2019). This research has provided rich insights into how and when entrepreneurs can attract additional funding after a crowdfunding campaign (e.g., Buttice et al, 2017;Colombo & Shafi, 2021;Drover et al, 2017;Roma et al, 2017;Rossi et al, 2022;Signori & Vismara, 2018) and how crowdfunding may impact ventures' overall profitability or failure (e.g., Coakley et al, 2022;Hornuf et al, 2018;Mollick & Kuppuswamy, 2014;Walthoff-Borm et al, 2018).…”

Equity Crowdfunding in The Digital Age: Evaluating The Impact on Firm Performance in The Malaysian Context

“…Last but not least, to examine if non-family and family-based businesses have an impact on the ECF's success. According to Rossi, Vanacker, and Vismara (2023), a family-based firm tends to offer voting rights later, after the prior campaign was not successful.…”

IPO performance of portfolio ventures funded by impact investors versus venture capital investors

“…Crunchbase data has been used in various studies that cover the performance of VC investors (e.g., Reiff & Tykvová, 2021), business angels (e.g., Block et al, 2019), or startups and their entrepreneurs (e.g., Kleinert et al, 2021). Furthermore, while other IPO studies often rely on data from Zephyr (e.g., Rigamonti et al, 2016), prior research that investigated the relationship between private and public equity also frequently relies on Crunchbase data (e.g., Rossi et al, 2020Rossi et al, , 2022Signori & Vismara, 2018). To identify our sample of impact investors and matched VC investors from Crunchbase, we initially retrieve the full population of 770,840 investments by 112,148 investors (as of May 2022).…”