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Equity retention and social network theory in equity crowdfunding

Vismara, Silvio

Small business economics, 2016-04, Vol.46 (4), p.579-590 [Peer Reviewed Journal]

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Title:
Equity retention and social network theory in equity crowdfunding
Author: Vismara, Silvio
Subjects: Business and Management ; Capital investments ; Crowdfunding ; Economic models ; Economic statistics ; Economic theory ; Entrepreneurial finance ; Entrepreneurs ; Entrepreneurship ; Equity ; Finance ; Funding ; Industrial Organization ; Initial public offerings ; Investors ; Management ; Microeconomics ; Signaling ; Small business ; Social capital ; Social networks ; Stock exchanges ; Studies ; Venture capital
Is Part Of: Small business economics, 2016-04, Vol.46 (4), p.579-590
Description: This paper makes two contributions to research on the new entrepreneurial finance context of equity crowdfunding. First, we compare its regulation around the world and discuss how this impacts the development of markets. Second, we investigate the signaling role played toward external investors by equity retention and social capital. Using a sample of 271 projects listed on the UK platforms Crowdcube and Seedrs in the period 2011-2014, we find that campaigns launched by entrepreneurs (1) who sold smaller fraction of their companies at listing and (2) had more social capital had higher probabilities of success. Our results combine findings in classical entrepreneurial finance settings, like venture capital and IPOs, with evidence from other, non-equity crowdfunding markets.
Publisher: New York: Springer
Language: English

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