On the Road to Success in Equity Crowdfunding

Abstract

This paper extends the role of signaling and certification to the context of equity crowdfunding by looking into the determinants of funding success on the world's largest equity crowdfunding platform Crowdcube. We identify and empirically test four potential (third party) signals of quality using a sample of 541 campaigns launched between January 2012 and March 2015. Our results suggest that companies that are backed by a business angel, win grants and protect their intellectual property have significantly increased chances of success in equity crowdfunding. Retaining equity does not influence funding success.

Keywords: Entrepreneurial finance, Equity-based crowdfunding, Signaling, Certification

JEL Classification: G30