An Empirical Investigation of Equity-Based Crowdfunding Campaigns in the United States (original) (raw)

Following the introduction of the JOBS Act in 2016, equity-based crowdfunding has become an alternative e-Business model for startups to fund their companies. Since then, the number of platforms that offer equity-based crowdfunding as well as the total investment in equity-based crowdfunding has steadily increased. Yet, empirical research on equity-based crowdfunding has been lagging, and the empirical evidence has suggested some inconsistent findings across different contexts. Against this backdrop, this paper investigates the success factors for equity-based crowdfunding campaigns. Using a dataset collected from the EquityNet and CrunchBase platforms, we find that lack of prior experience with fundraising is the most important factor that helps equitybased crowdfunding campaigns attract any capital at all from investors; while the number of social networking connections of the core management team and the company valuation will determine the amount of capital that a business can raise through equity-based crowdfunding. Our findings call for additional research that looks at success factors for different types of outcomes in equitybased crowdfunding.