Does equity crowdfunding democratize entrepreneurial finance?

Cumming, Douglas J.; Meoli, Michele; Vismara, Silvio

doi:10.1007/s11187-019-00188-z

Cited by 146 publications

(83 citation statements)

References 77 publications

(73 reference statements)

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“…An alternative explanation is that crowdfunding is mostly used by students (and academic staff) to create a learning experience that they perceive to be more beneficial, but which their universities may not provide because they follow traditional teaching-and curricular-based thinking. If the latter is true, the results likely provide additional evidence of the democratization effect of digital finance, supporting Cumming et al's (2019) findings concerning stakeholder participation in equity firms. However, our findings seem to strongly support the former explanation, as crowdfunding participation and engagement are mostly sought by universities that are teaching-oriented, less prestigious, and have more students from state schools and low-participation neighborhoods.…”

Section: Discussionsupporting

confidence: 75%

Crowdfunding in higher education: evidence from UK Universities

2021

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In contemporary higher education systems, funding is increasingly associated with performativity, assessment, and competition, and universities are seeking different forms of financing their activities. One of these new forms is crowdfunding, a tool enabled by the digitalization of finance. Based on data from the UK higher education system and two crowdfunding platforms, our study adds to previous crowdfunding research in academic settings that have, thus far, focused on research projects, and assesses who is participating, their level of engagement and the resources they have gathered from crowdfunding. Our findings show that crowdfunding is used more by universities that have fewer resources. These universities are more teaching-oriented, less prestigious, and have a student body largely derived from lower socio-economic sectors of society. The popularity of crowdfunding in this type of university suggests that crowdfunding may enhance the democratization of higher education funding. However, as optimal crowdfunding participation and engagement requires high academic-to-student ratios and total-staff-to-academic-staff ratios, universities facing a greater financial precarity may be disadvantaged in their access to and engagement with crowdfunding. Differentials between part-time and full-time student ratios may exacerbate this disadvantage. Our study suggests that crowdfunding is a viable means of obtaining additional financing for learning activities complementing the fundings from other sources, but raises concerns about the use of crowdfunding as a burden to academics and students to find resources to meet learning experiences that ought to be provided by universities in the first place.

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Section: Discussionsupporting

confidence: 75%

Crowdfunding in higher education: evidence from UK Universities

2021

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“…Second, our focus on human capital suggests that other characteristics of crowdfunders such as gender (Bapna & Ganco, 2020;Cumming et al, 2021b), cognitive style (analytical versus intuitive) (Allison & Hayes, 1996), or social perception skills (Baron & Markman, 2003) may influence signal set formation. Crowdfunders may also build different signal sets depending on the fundraiser's characteristics (e.g., when the fundraiser is passionate about their business idea (Davis et al, 2017).…”

Section: Limitations and Additional Avenues For Future Researchmentioning

confidence: 99%

Equity Crowdfunders’ Human Capital and Signal Set Formation: Evidence From Eye Tracking

Butticè

Collewaert

Stroe

et al. 2021

Entrepreneurship Theory and Practice

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Signaling theory typically assumes that attention is always given to observable signals. We study signal receivers’ formation of signal sets—the signals to which receivers attend and that they can use for subsequent interpretations. Drawing on a cognitive perspective, we argue that signal receivers’ human capital influences the volume and type of signals they attend to and the time they take to form signal sets. Using eye tracking, we show that equity crowdfunders do not attend to many signals that are easily observable on a campaign page, and that differences in crowdfunders’ human capital uniquely affect their signal set formation.

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“…Goethner et al (2020) formulate hypotheses about the relation between the reception of human and entrepreneurial quality signals and the investment decisions of the distinctive groups of CF investors. The hypotheses notably build on Becker (1964), Ahlers et al (2015), Cumming et al (2020), Piva and Rossi-Lamastra (2018), Bapna (2019), Epstein and Schneider (2008), and Vismara (2018). The insight gained into the heterogeneity of CF investors, their motivations to fund campaigns, and their response to quality signals is important for the design of CF platforms and for entrepreneurs.…”

Section: Cfmentioning

confidence: 99%

The entrepreneurial finance markets of the future: a comparison of crowdfunding and initial coin offerings

et al. 2020

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Entrepreneurial finance markets are in a dynamic state. New market niches and players have developed and continue to emerge. The rules of the game and the methods for receiving financial backing have changed in many ways. This editorial and the special issue of Small Business Economics focus on crowdfunding (CF) and initial coin offerings (ICOs), which are two distinct but important entrepreneurial finance market segments of the future. Although the two market segments initially appear to be similar, we identify differences between them. Our comparison focuses on the stakeholders, micros t r u c t u r e s , r e g u l a t o r y e n v i r o n m e n t s , a n d development of the markets. We conclude with suggestions for future ICO and CF research.

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Does equity crowdfunding democratize entrepreneurial finance?

Cited by 146 publications

References 77 publications

Crowdfunding in higher education: evidence from UK Universities

Crowdfunding in higher education: evidence from UK Universities

Equity Crowdfunders’ Human Capital and Signal Set Formation: Evidence From Eye Tracking

The entrepreneurial finance markets of the future: a comparison of crowdfunding and initial coin offerings

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