Access to Digital Finance: Equity Crowdfunding across Countries and Platforms

Saul Estrin (), Susanna Khavul (), Alexander Kritikos and Jonas Löher ()
Additional contact information
Saul Estrin: London School of Economics
Susanna Khavul: San Jose State University
Jonas Löher: IfM Bonn

No 16679, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Financing entrepreneurship spurs innovation and economic growth. Digital financial platforms that crowdfund equity for entrepreneurs have emerged globally, yet they remain poorly understood. We model equity crowdfunding in terms of the relationship between the number of investors and the amount of money raised per pitch. We examine heterogeneity in the average amount raised per pitch that is associated with differences across three countries and seven platforms. Using a novel dataset of successful fundraising on the most prominent platforms in the UK, Germany, and the USA, we find the underlying relationship between the number of investors and the amount of money raised for entrepreneurs is loglinear, with a coefficient less than one and concave to the origin. We identify significant variation in the average amount invested in each pitch across countries and platforms. Our findings have implications for market actors as well as regulators who set competitive frameworks.

Keywords: equity crowdfunding; soft information; entrepreneurship; finance; financial access and inclusion (search for similar items in EconPapers)
JEL-codes: D26 G23 G41 L26 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2023-12
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-ent, nep-eur, nep-fdg, nep-ifn, nep-ind, nep-pay and nep-sbm
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Published - published in: PLoS ONE, 2024, 19 (1), e0293292.

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