Equity Crowdfunding: Brave Market or Safe Haven for the Crowd During the COVID-19 Crisis?

46 Pages Posted: 5 Aug 2020

See all articles by Francesca Battaglia

Francesca Battaglia

University of Naples Parthenope

Francesco Busato

University of Naples Parthenope

Maria Manganiello

University of Naples Parthenope

Date Written: July 1, 2020

Abstract

By analyzing a full dataset of 437 Italian equity crowdfunding campaigns over the period 2014-2020, and then by focusing on a sub-sample of 79 projects posted on the websites of platforms from January 2020 to June 2020, this chapter explores the impact of the COVID-19 pandemic on the Italian equity crowdfunding sector. In detail, we investigate whether and to what extent the key drivers (i.e. female founders, social capital and equity offered) that brought backers to finance a specific project before COVID-19 are the same nowadays, and which type of ventures backers are more prone to finance via equity crowdfunding in the aftermath of the crisis. We provide evidence that the strength of the effect of our key variables on the campaign’s success has changed during the COVID-19 crisis. We also find that backers are more prone to finance companies with a high level of R&D expenditure and technological projects. Moreover, we point out that ventures not located in a red zone are more likely to be successfully financed by backers and that they are more willing to invest in projects launched in platforms implementing specific measures in response to COVID-19.

Keywords: Entrepreneurial Finance, Signaling Theory, Crisis, COVID-19, Behavioral Finance, Red Zones

JEL Classification: D82, G24, G30, G32, L26, M13

Suggested Citation

Battaglia, Francesca and Busato, Francesco and Manganiello, Maria, Equity Crowdfunding: Brave Market or Safe Haven for the Crowd During the COVID-19 Crisis? (July 1, 2020). Available at SSRN: https://ssrn.com/abstract=3666021 or http://dx.doi.org/10.2139/ssrn.3666021

Francesca Battaglia

University of Naples Parthenope ( email )

Via Medina 40
Via Generale Parisi, 13
Naples, 80133
Italy

Francesco Busato

University of Naples Parthenope ( email )

Via Medina 40
Via Generale Parisi, 13
Naples, 80133
Italy

Maria Manganiello (Contact Author)

University of Naples Parthenope ( email )

Via Generale Parisi, 13
Naples, 80133
Italy

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