They do not look alike: what kind of private investors do equity crowdfunded firms attract?

Vincenzo Butticè (), Francesca Pietro and Francesca Tenca
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Vincenzo Butticè: Politecnico Di Milano
Francesca Pietro: The University of Dublin
Francesca Tenca: Politecnico Di Milano

The Journal of Technology Transfer, 2022, vol. 47, issue 6, No 5, 1707-1736

Abstract: Abstract Using a dataset of 170 firms that successfully fundraised via the two most prominent UK equity crowdfunding platforms, we investigate whether and how having successfully run an equity crowdfunding campaign is associated to the reputation of follow-on venture capital investors attracted. From the comparison with a control group of firms that received a seed round from business angels, we found that firms that have run a successful equity crowdfunding campaign attract lower reputable VCs. These results are confirmed when controlling for endogeneity and for firms’ characteristics. Considering the shareholder structure chosen by the firm raising equity crowdfunding, we found that firms opting for a direct shareholder structure, which entails higher coordination and agency costs, attract less reputable VCs compared to firms opting for the nominee shareholder structure.

Keywords: Equity crowdfunding; Venture capital; Reputation; Follow-on financing; Post campaign performance (search for similar items in EconPapers)
JEL-codes: G20 G24 M13 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10961-021-09895-w

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