Be Careful What You Ask For: Fundraising Strategies in Equity Crowdfunding

Hellmann, Thomas; Mostipan, Ilona; Vulkan, Nir

doi:10.3386/w26275

Cited by 6 publications

(2 citation statements)

References 35 publications

(41 reference statements)

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“…Campaign studies previously described focused on the issuer's external characteristics, such as entrepreneurial qualities, patents, website attractiveness and the presence of angel investors, but not on the issuer's business plan or the share price of the issued stock. Hellmann et al (2019) used the pre-money-market capitalization as an explanatory variable for the success or failure of a campaign but did not examine returns on the investment.…”

Section: Prior Researchmentioning

confidence: 99%

Equity crowdfunding and financial literacy of individual investors in Japan

Fujii

Hosomi

Nose

2021

JCMS

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PurposeThis study aims to fill the gap in previous research that focuses on the superficial aspects of equity crowdfunding (ECF) campaigns and financial practices by examining financial literacy aspects, such as due diligence and valuation, in terms of factors that influence Japanese individual investors' investments in ECF.Design/methodology/approachThe status of information disclosure in ECF campaigns is checked. In addition, the feasibility of the initial due diligence and valuation using this information is verified. Specifically, the lack of financial literacy hypothesis is developed and (1) expected market capitalization in the final fiscal year of the business plan and (2) expected returns on investment (IRR: internal rate of return) are estimated.FindingsECF campaigns in Japan disclose information equivalent to that obtained by professional venture capitalists. Analysis of the disclosed business plan allows for initial due diligence and valuation. By contrast, due diligence reveals that some projects are unlikely to be listed even if their business plans are met, and others have low IRRs. In addition, a stock acquisition rights project, in which even professional investors are unable to calculate IRRs, is completed at the same rate as a common stock project; this suggests that individual investors lack financial literacy.Originality/valueAnalyzing ECF from financial literacy aspects, such as due diligence and valuation, is unique. Such aspects are essential for private equity investments but have not been addressed in previous studies.

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Section: Prior Researchmentioning

confidence: 99%

Equity crowdfunding and financial literacy of individual investors in Japan

Fujii

Hosomi

Nose

2021

JCMS

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“…5. Public policies which support crowdfunding campaigns, such as tax incentives for investors in crowdfunding campaigns-Gromek refers to the EIS/SEIS Scheme in the United Kingdom (Vulkan et al 2016;Hellmann et al 2019;Ralcheva and Roosenboom 2016). 6.…”

Section: Existence Of Crowdfunding Associations-gromek Refers To the ...mentioning

confidence: 99%

Assessing the Maturity of Crowdfunding and Alternative Finance Markets

Wenzlaff

Odorović

Kleverlaan

et al. 2021

Crowdfunding in the Public Sector

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In order to assess how public authorities and crowdfunding platforms can collabo-rate, it is essential to understand the different levels of maturity of the Crowdfunding ecosystem. The chapter analyses concepts developed in the crowdfunding literature. It establishes a unified framework to understand the increasing complexity of crowdfunding industries, by discussing the conceptual framework of Crowdfunding success. It proceeds to describe several models of maturity of industries by applying entrepreneurial ecosystem theory to the alternative finance space. Lastly, it transfers entrepreneurial ecosystem theory to the alternative finance regulation and the four scenarios of fitting crowdfunding and alternative finance into existing regulation.

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Production Models

Øverby¹,

Audestad²

2021

Introduction to Digital Economics

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Be Careful What You Ask For: Fundraising Strategies in Equity Crowdfunding

Cited by 6 publications

References 35 publications

Equity crowdfunding and financial literacy of individual investors in Japan

Equity crowdfunding and financial literacy of individual investors in Japan

Assessing the Maturity of Crowdfunding and Alternative Finance Markets

Production Models

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