Nowadays equity crowdfunding plays an important role in the entrepreneurial finance markets. To better understand the functioning of the industry, it is important to consider the entire equity ...crowdfunding process and all the actors involved. Equity crowdfunding platforms match indeed the demand of capital from entrepreneurial ventures with the supply of capital by investors. This manuscript is a first step in this direction, by (1) comparing equity crowdfunding with traditional sources of entrepreneurial finance; (2) discussing the potential and the perils of equity crowdfunding for inclusivity and democratization; (3) highlighting the role of visual information in digital finance; and (4) providing first insights on the industrial dynamics in equity crowdfunding. The paper gives researchers and practitioners orientation about recent developments in equity crowdfunding literature and provides relevant research directions.
In this paper, we focus attention on serial crowdfunders, that is, entrepreneurs who repeatedly turn to crowdfunding to finance their projects. We argue that serial crowdfunders take advantage of the ...social contacts with those that backed their previous campaigns. This internal social capital developed within the platform, which is not available to “normal” serial entrepreneurs, makes serial crowdfunders’ campaigns more successful than those launched by novice crowdfunders. However, this type of social capital is a substitute for the internal social capital built by backing other campaigns, and has a limited lifespan. Econometric results on a sample of 31,389 Kickstarter campaigns confirm our contentions. Implications for research, practice, and policy are discussed.
In the first ten years of research on crowdfunding (CF), the growing interest in this topic among scholars has led to a rapid evolution of the scientific literature. Despite this interesting trend, ...no attempt has yet been made to provide a bibliographic analysis about how the subject has evolved over time and how the community working on this topic has changed. This article aims to investigate the status of and the trends in this literature by identifying, synthesizing, and evaluating the extant research on CF. Specifically, we focus on the characteristics of the authors and manuscripts written on the subject; the thematic areas investigated by scholars; the methodology employed in the existing studies; the main outlets for publication; and the level of dispersion of the scientific community involved in investigating CF. We also provide an analysis of backward and forward citations to provide an indication of the impact of CF research. Overall, this article shows that this body of research has undergone a significant transformation, moving from an early stage of identification and exploration to a more advanced phase characterized by a greater maturity, rigor and in-depth coverage of the examined topics. We also show a limited tendency for cross-country collaborations and an increasing impact of CF research over the years. This article may represent a guide for scholars interested in conducting research on CF, to identify highly debated research areas, and to select the most adequate methodologies and the right publication outlets.
In this paper, we extend the nascent literature interested in understanding the role of narcissism in determining resource acquisition by entrepreneurs. Using a sample of 59,538 crowdfunding ...campaigns launched by individual entrepreneurs on the crowdfunding platform Kickstarter and adopting an unobtrusive measure of narcissism derived from the literature, we demonstrate that a negative relation exists between narcissism and crowdfunding success: the greater the entrepreneur's narcissistic personality, the lower the probability s/he succeeds in funding her/his crowdfunding campaign. Nevertheless, this relation changes depending on the entrepreneurial context in which the entrepreneur sets her/his crowdfunding campaign.
•Does narcissism influence entrepreneur's resource acquisition through crowdfunding?•We analyze data from 59,538 crowdfunding campaigns on Kickstarter.•We measure entrepreneur's narcissism by means of the first-person pronoun usage.•Entrepreneur's narcissism negatively relates to crowdfunding success.•Results are contingent to the entrepreneurial context in which the campaign is set.
This paper examines the role of internal social capital on the composition of the crowd of backers attracted by US-born vis a vis immigrant entrepreneurs. Our estimates are based on an original ...dataset of 2,231 Kickstarter campaigns and show that immigrant entrepreneurs attract comparatively fewer backers located in the host country but receive more contributions from backers located in other countries. Overall, this allows immigrant entrepreneurs to achieve a fundraising performance similar to that of local-born entrepreneurs. We show that entrepreneurs’ social capital developed within the reward-based crowdfunding platform positively moderates the previous relationships.
Plain English Summary
Crowdfunding helps immigrants mobilising their home-county network and collect funding for their business ideas. Immigrants who supported other campaigns before launching their own attain better fundraising performance than local-born entrepreneurs We analyse 2,231 campaigns launched on Kickstarter and show that immigrant entrepreneurs attract comparatively fewer backers located in the host country but receive more contributions from backers located in other countries, and particularly in their home country. Overall, this allows immigrant entrepreneurs’ campaigns to be as successful as those launched by local-born entrepreneurs. Immigrant entrepreneurs that have been active on the crowdfunding platform by supporting others’ campaigns before the launch of their own campaign attract more backers and have higher likelihood of success compared to local-born entrepreneurs. The paper highlights an effective channel of financing for immigrant entrepreneurs seeking external capital.
Building on the theories of social capital and social obligation, we study how the attraction of active backers, that is, backers who participate in the co-design of the product is associated with ...product commercialisation and product quality after a reward-based crowdfunding campaign. We argue theoretically and show empirically that this association varies when the entrepreneur’s experience in conducting crowdfunding campaign is taken into account. Through a quantitative analysis of 1406 board games campaigns posted on Kickstarter, we show that for entrepreneurs who are novice to crowdfunding, attracting a large crowd of active backers increases the chances to commercialise the product after the campaign, while it reduces its final quality. On the contrary, for entrepreneurs who already relied on crowdfunding in the past, the attraction of a large crowd of active backers is associated with increasing product quality.
Building upon the gender role congruity theory, in this paper, we propose that the association between gender diversity and venture performance changes when roles played by individuals are not ...coherent with the gender-derived expectations of their ascribed social group. We test our theory in the context of early stage financing, investigating how gender diversity between entrepreneurs and VC managers influences the investment performance of VC-backed firms. Our sample consists of 5800 VC managers, who invested in 5075 different ventures in the period 2000–2019 and of 16,713 venture founders. We find that gender diversity is associated with better performance only when a female entrepreneur is matched to a male VC manager. Our analysis sheds light on the presence of several factors that moderate the observed association, related to the VC’s ability to provide value-added services to the invested ventures.
The diffusion of crowdfunding among countries differs consistently, based, in part, on differences in national institutional environments. This study analyses the influence of formal and informal ...institutions in 27 different countries during the 2014–2017 period, on the development of crowdfunding. Our results show that the crowdfunding market – across all the different crowdfunding typologies- is larger in countries characterized by a business-friendly legal environment, and well-developed financial market in the case of lending crowdfunding. Individualistic societies register higher crowdfunding activity across the different typologies; lending crowdfunding is more widespread in countries characterized by higher uncertainty-avoidance and, together with equity crowdfunding, in long-term oriented societies.
•Crowdfunding investments are influenced by national institutional environments, formal and informal.•Crowdfunding activity is higher in countries with a business-friendly legal environment and a developed financial market.•Individualistic societies register higher crowdfunding activity across the different crowdfunding typologies.•Lending crowdfunding is more widespread in countries characterized by higher uncertainty-avoidance.•Lending and equity crowdfunding are more widespread in long-term oriented societies.
Signaling theory typically assumes that attention is always given to observable signals. We study signal receivers’ formation of signal sets—the signals to which receivers attend and that they can ...use for subsequent interpretations. Drawing on a cognitive perspective, we argue that signal receivers’ human capital influences the volume and type of signals they attend to and the time they take to form signal sets. Using eye tracking, we show that equity crowdfunders do not attend to many signals that are easily observable on a campaign page, and that differences in crowdfunders’ human capital uniquely affect their signal set formation.
This paper provides evidence that equity crowdfunding has implications for firms long after the capital raised through the campaign is injected. Using a unique dataset of 290 firms that successfully ...fundraised via the two most prominent UK equity crowdfunding portals, we examine how different shareholder structures, namely the nominee vs. the direct shareholder structure, affect the attraction of venture capital financing. From the comparison with a control group of twin firms that did not receive any external seed financing, we find that a successful equity crowdfunding campaign facilitates the attraction of VC financing. This association is stronger for equity crowdfunding campaigns with a nominee shareholder structure, while it results weaker when the direct shareholder structure is chosen. Compared to a different control sample of angel-backed firms, receiving equity crowdfunding through a nominee structure facilitates the attraction of VC financing.
•We analyze 290 firms that successfully fundraised via equity crowdfunding (ECF).•Receiving ECF facilitates the attraction of VC financing.•This association is stronger when the firm selected a nominee shareholder structure.•Compared to BA-backed firms, ECF through a nominee structure eases VC-attraction.
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