Equity retention and social network theory in equity crowdfunding
Silvio Vismara ()
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Silvio Vismara: University of Bergamo
Small Business Economics, 2016, vol. 46, issue 4, No 5, 579-590
Abstract 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.
Keywords: Crowdfunding; Signaling; Network theory; National Systems of Entrepreneurship; Entrepreneurial finance; G18; G38; L26 (search for similar items in EconPapers)
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