Entrepreneurial dynamics and investor-oriented approaches for regulating the equity-based crowdfunding

Abstract

<jats:sec><jats:title content-type="abstract-subheading">Purpose</jats:title><jats:p>The aim of this research is to contribute to the existing literature about the entrepreneurial conditions in crowd-based contexts by describing how different European countries regulate equity crowdfunding market in order to incentive the investments and protect investors.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title><jats:p>Based on a legal acts' analysis, we conduct a qualitative study comparing the crowdfunding regulation addressed to investors. In particular, we focus our analysis on the European countries with the highest concentration of crowdfunding platforms (i.e. the UK, Germany, France, Italy and Spain).</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Findings</jats:title><jats:p>The results show that some countries, such as the UK, Germany and France, present an investor-oriented approach based on non-restrictive regulation, while other countries, such as Spain and Italy, have a restrictive approach that protects investors excessively and discourages them. In particular, the case study of France shows how the introduction of unrestricted regulation can produce positive effects on the volume of crowdfunding transactions.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Practical implications</jats:title><jats:p>The paper is addressed to investors, policymakers and intermediaries (platforms) to help the first in orienting themselves between the different crowdfunding regulations and the latter in aligning and orchestrating rules and norms.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Originality/value</jats:title><jats:p>This is the first study that analyses the role of investor-oriented regulations in the promotion of entrepreneurship through the identification of four key factors to monitor equity crowdfunding regulations.</jats:p></jats:sec>

Determinants of Overfunding in Equity Crowdfunding: An Empirical Study in the UK and Spain

“…However, many other important regulatory aspects depend largely on the national laws (Cicchiello et al [47]). The influence of national policies on crowdfunding has been widely documented by prior research (Vismara [11], Hornuf and Schwienbacher [30], Cumming and Johan [53], Klöhn [54], Estrin et al [55]).…”

“…Second, outstanding differences between countries are observed along the (nearly) entire distribution of overfunding success. Factors like trust in institutions, transparency or regulation, which depend crucially on governments, may lead to distinct behavioural patterns between countries (Dushnitsky et al [46], Cicchiello et al [47]). In other contexts, evidence for between-country variation is mixed (see, for example, Batrancea et al [48] and Batrancea and Nichita [49] in tax compliance behaviour).…”

Mapping crowdfunding in cultural and creative industries: A conceptual and empirical overview

“…In lending-based crowdfunding (P2P, peer-to-peer, or P2B, peer-to-business), funders (lenders) lend money to consumers or entrepreneurs (borrowers) in return for a certain rate of interest (Morse, 2015). Finally, in the equity-based model, investors become shareholders of the funded company through the purchase of a small equity stake, sharing the potential profits and risks of the company (Cicchiello et al, 2021;Cicchiello & Leone, 2020;Del Sarto & Magni, 2018).…”

Crowdfunding System Models in the African Context: The Susu and Yibima Concepts in Ghana

“…Overall, evidence emerging from the data suggests it is a form of crowd fundraising campaign usually adopted by members of the public, community groups and associations to support various project initiatives (Steel and Andah, 2003;Walker, 2017). Indeed, in some cases, Yibima campaigns are used to raise startup capital for members who are experiencing financial downturn in their business fortunes (Steel and Andah, 2003;Walker, 2017;Cicchiello et al, 2020;Amoah-Mensah, 2021). Yibima fundraising campaigns are also used to support community projects such as schools and hospitals (Steel and Andah, 2003;Anku-Tsede, 2013;Walker, 2017;Amoah-Mensah, 2021).…”