Does equity crowdfunding democratize entrepreneurial finance?

Douglas Cumming, Michele Meoli, Silvio Vismara

    Research output: Contribution to journalArticlepeer-review

    14 Citations (Scopus)
    248 Downloads (Pure)

    Abstract

    This paper investigates whether gender, age, ethnicity, and geography affect the choice of equity crowdfunding offerings vs initial public offerings (IPO) on traditional stock markets and whether these characteristics increase the likelihood of a successful offering. Using 167 equity offerings in Crowdcube and 99 equity offerings on London’s Alternative Investment Market raising between £300,000 and £5 m, we find that companies with younger top management team (TMT) members are both more likely to launch equity crowdfunding offerings than IPOs and have higher chances to successfully complete an equity crowdfunding offering. Remotely located companies are more likely to launch equity crowdfunding offerings than IPOs and have higher chances to successfully complete an equity crowdfunding offering. On the contrary, female entrepreneurs do not have higher chances to raise funds in equity crowdfunding. Minority entrepreneurs do not have higher chances of successfully raising capital but do attract a higher number of investors. Overall, our evidence provides empirical guidance for the first time to the oft-repeated policy claim that equity crowdfunding democratizes entrepreneurial finance by providing access to funding to underrepresented groups of potential entrepreneurs.
    Original languageEnglish
    Pages (from-to)773-809
    Number of pages16
    JournalSmall Business Economics
    DOIs
    Publication statusPublished - 3 Jun 2019

    Keywords

    • crowdfunding
    • finance democratization
    • non-bank financial institutions
    • entrepreneurship

    Fingerprint

    Dive into the research topics of 'Does equity crowdfunding democratize entrepreneurial finance?'. Together they form a unique fingerprint.

    Cite this