COVID-19 and Entrepreneurial Processes in U.S. Equity Crowdfunding

Abstract

The COVID-19 pandemic brought about a shift in entrepreneurial opportunities in the
United States. In this paper, we proxy entrepreneurial processes by examining housing prices in
different regions of the United States. Housing prices capture the movement in people, tax
dynamics, and behavioral preferences for equity ownership in different regions and over time, all
of which were drastically impacted by COVID-19. We examine all U.S. equity crowdfunding
offerings starting with the very first offerings in 2016 Q2 until 2021 Q1 based on data from the
Securities and Exchange Commission. The data indicate that regional housing prices postCOVID-19 are a strong predictor of the number of equity crowdfunding campaigns and the
amount of capital raised. Also, the impact of housing price changes on crowdfunding is more
pronounced among more prosperous regions. The housing price effect is robust to numerous
controls and consideration of outliers

Keywords: Equity Crowdfunding, COVID-19, Regional Entrepreneurship

JEL Classification: G21, G28, G51