Enfranchising the crowd: Nominee account equity crowdfunding

46 Pages Posted: 21 Apr 2021

See all articles by Jerry Coakley

Jerry Coakley

University of Essex - Essex Business School

Douglas J. Cumming

Florida Atlantic University; Birmingham Business School; European Corporate Governance Institute (ECGI)

Aristogenis Lazos

Audencia Business School

Silvio Vismara

University of Bergamo

Multiple version iconThere are 2 versions of this paper

Date Written: April 9, 2021


The nominee approach to equity crowdfunding pools all crowd investors into one (nominee) account where typically the platform acts as the legal owner but the crowd retains beneficial ownership. The platform plays an active digital corporate governance role that simultaneously enfranchises crowd investors with voting and ownership rights but removes the administrative burden on startups of having to deal with several hundred shareholders. Through an inter-platform and intra-platform analysis of a large sample of 1,018 initial equity crowdfunding campaigns, this paper assesses both the short-term and the long-term impact of nominee versus direct ownership. It finds that nominee initial campaigns are on average more successful than direct ownership campaigns in that they are more likely to succeed, raise more funds, attract overfunding and enjoy greater long run success in terms of successful seasoned equity crowdfunded offerings, numbers of such offerings, and probability of survival. These results hold inter-platform between the two main UK equity crowdfunding platforms (Seedrs and Crowdcube) as well as intra-platform, using the post-2015 quasi-natural experiment when the nominee approach became an option for startups raising capital on Crowdcube.

Keywords: Entrepreneurial finance; corporate governance, nominee account.

JEL Classification: G240, M130

Suggested Citation

Coakley, Jerry and Cumming, Douglas J. and Lazos, Aristogenis and Vismara, Silvio, Enfranchising the crowd: Nominee account equity crowdfunding (April 9, 2021). Available at SSRN: https://ssrn.com/abstract=3830741 or http://dx.doi.org/10.2139/ssrn.3830741

Jerry Coakley (Contact Author)

University of Essex - Essex Business School ( email )

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HOME PAGE: http://https://www.essex.ac.uk/people/coakl35000/jerry-coakley

Douglas J. Cumming

Florida Atlantic University ( email )

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United States

HOME PAGE: http://sites.google.com/view/douglascumming/bio?authuser=0

Birmingham Business School ( email )

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United Kingdom

European Corporate Governance Institute (ECGI) ( email )

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1000 Brussels

HOME PAGE: http://https://ecgi.global/users/douglas-cumming

Aristogenis Lazos

Audencia Business School ( email )

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Nantes Cedex 3, 44312

Silvio Vismara

University of Bergamo ( email )

Via dei Caniana
Bergamo, 24127
24127 (Fax)

HOME PAGE: http://https://scholar.google.it/citations?user=Sa8sBkoAAAAJ&hl=en

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