On the Road to Success in Equity Crowdfunding

Ralcheva, Aleksandrina; Roosenboom, Peter

doi:10.2139/ssrn.2727742

On the Road to Success in Equity Crowdfunding

30 Pages Posted: 5 Feb 2016 Last revised: 13 Nov 2016

See all articles by Aleksandrina Ralcheva

Aleksandrina Ralcheva

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Peter Roosenboom

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Date Written: November 1, 2016

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

Suggested Citation: Suggested Citation

Ralcheva, Aleksandrina and Roosenboom, Peter, On the Road to Success in Equity Crowdfunding (November 1, 2016). Available at SSRN: https://ssrn.com/abstract=2727742 or http://dx.doi.org/10.2139/ssrn.2727742