Equity Crowdfunding: Brave Market or Safe Haven for the Crowd During the COVID-19 Crisis?

Battaglia, Francesca; Busato, Francesco; Manganiello, Maria

doi:10.2139/ssrn.3666021

Cited by 8 publications

(10 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…In traditional funding markets, entrepreneurs often face difficulties in finding external sources to finance their startup projects (Battaglia et al , 2020); restaurant entrepreneurs face even greater difficulties. Compared to other industries, it is relatively easy to start a foodservice business, and the exit rate is high (Quinn et al , 1992).…”

Section: Introductionmentioning

confidence: 99%

Is restaurant crowdfunding immune to the COVID-19 pandemic?

Yang

Koh

2022

IJCHM

View full text Add to dashboard Cite

Purpose In 2020, the COVID-19 pandemic had a devastating impact on global health care and the economy. The restaurant industry has been especially hit hard by the statewide “stay-at-home” orders. To get back on track, many of these businesses need capital. A new and effective form of fundraising for business startups is crowdfunding (CF). However, there has been little research on the pandemic impact on CF. This study aims to fill this gap by investigating the pandemic-related impact on restaurant CF. Design/methodology/approach This study extracted all 2,686 restaurant CF projects in the USA from the Kickstarter platform from April 2010 to January 2021. By conducting descriptive analyses and multiple logistic regression models, this study examined the pandemic impact on CF success. Findings This study finds that, while controlling the effects of other determinants, businesses in the midst of the pandemic are more likely to be successfully funded than businesses unaffected by the pandemic. Findings also reveal that restaurant startups lowered their funding goals and posted more updates/comments/pledge levels during the pandemic, which made projects more likely to be selected as a “Project We Love” and increased the odds of funding success. However, mentioning COVID-19-related information or locating projects in “red zones” are not found to have any significant direct or moderating impact on the funding success. Research limitations/implications This study pioneers the research topic restaurant CF and attempts to raise the research attention of small- and medium-sized enterprises and entrepreneurial financing. Using quantitative methods, it provides a new perspective on pandemic-impact research. Social exchange theory is extended to the context of reward-based CF under crisis. Finally, to the best of the authors’ knowledge, this is the first investigation of the possible moderating effect of project location on the relationship between restaurant CF characteristics and success. Practical implications The findings of this study suggest restaurateurs to be confident about the fundraising of their startup business through reward-based CF, even when located within so-called pandemic red zones, and perform appropriate communication strategies while using the reward-based CF. Originality/value This study is one of the earliest to examine the main and moderating effects of the pandemic-related factors on business CF in the hospitality realm. The findings are reference for researchers and restaurateurs on fundraising in a crisis context.

show abstract

Section: Introductionmentioning

confidence: 99%

Is restaurant crowdfunding immune to the COVID-19 pandemic?

Yang

Koh

2022

IJCHM

View full text Add to dashboard Cite

show abstract

“…Even though investors actively participate in equity crowdfunding campaigns during the crisis, the number is decreasing (Battaglia et al, 2020;. Moreover, investors do not merely invest based on the percentage of shares offered (Buell et al, 2020).…”

Section: Conclusion and Discussionmentioning

confidence: 99%

“…Meanwhile, external bricolage, indicates the entrepreneur's behaviour and willingness to fully utilise external resources available (Vanevenhoven et al, 2011). Nevertheless, both serve the purpose of creating new combinations of resource inputs with the intent to foster the company's performance (Kariv & Coleman, 2015), the continued creation of shared value (Dominguez et al, 2020) and growth (Battaglia et al, 2020).…”

Section: Entrepreneurial Bricolagementioning

confidence: 99%

“…In fact, the food and beverage (FB) ventures also use applications such as online orders and reservations. According to Battaglia et al (2020), technology-related and research and development (R&D) industries were the most investor financed industries during COVID-19 pandemic. Table 7 also shows the most common information displayed on the platform during the campaigns.…”

Section: Firms That Successfully Launched Projects On the Ecf Platformmentioning

confidence: 99%

See 1 more Smart Citation

Covid-19: Costly Signals and Entrepreneurial Bricolage for Smes Survivability From the View of the Financial-Based Crowdfunding in Malaysia

Kassim¹,

Wahab²

2021

JBSD

View full text Add to dashboard Cite

Crowdfunding has altered the entrepreneurial funding landscape in Malaysia. Statistics generated by Securities Commission of Malaysia indicates that a number of small-and-medium-sized enterprises (SMEs) have benefitted from the equity (ECF) and peer-to -peer (P2P) lending in the crowdfunding markets. The recent COVID-19 pandemic has badly affected many economic sectors, especially SMEs. They are thus forced to adapt to the "new normal" in order to sustain continued growth and create shared value. The objective of this study is to explore the significance of costly signals, which attempts to explain instances of public generosity in which individuals incur costs without any immediate benefits or entrepreneurial bricolage, creating something from nothing by making do and applying combinations of resources at hand to new problems and opportunities to aid SMEs in obtaining financial assistance from the online investors. This is a conceptual study that refers to previous literature on costly signals and entrepreneurial bricolage. This study also used a content analysis technique where the equity crowdfunding platform's website during movement control order (MCO) from 18 th March, 2020 to 18 th November, 2020 was examined to gather the information. The contents related to ECF campaigns on the platform's website was extracted and used in the analysis. However, due to limited available literature on ECF and P2P on the available platforms, this study focused solely on the ECF campaigns hosted on the PitchIn Platform Sdn Bhd's website. Prompt and innovative decisions are crucial especially during the pandemic. Entrepreneurs need to be able to highlight vital information for stakeholders and potential investors. ECF platforms also need to be able to present and highlight their information as this could reduce the asymmetry of information. In this manner, both the platform and the entrepreneur will benefit from the growth of the crowdfunding market in Malaysia. As the sustainability of the crowdfunding ecosystem in Malaysia depends on the sustainability of the entrepreneurs and the platform providers policy measures by the government should not be restricted merely to eliminating cash flow burdens, but should also include the wider entrepreneurial landscape to improve its efficiency. The government needs to have real-time information so that any uncertainty facing the entrepreneurs can be handled accordingly. This study also suggests future research to further investigate the importance of costly signals under crowdfunding umbrella.

show abstract

“…Es como si, adicional a las estrategias de acompañamiento o subvención sostenidas desde el sector financiero (Yemelyanov et al, 2020, Pattnaik et al, 2020, Brickell et al, 2020, esta nueva realidad estuviera empezando a mostrarse como un ambiente propicio para el aumento y lanzamiento de propuestas que no necesariamente provienen de este sector, pero que buscan apoyar financieramente a los afectados: campañas de financiación colectiva y/o desarrollo de plataformas de financiación desde economía colaborativa. El efecto de la covid-19 en los mercados financieros proporciona evidencia sobre cambios en el proceder de los inversores minoristas, mostrando nuevas participaciones en inversiones financieras no tradicionales (Battaglia et al, 2020).…”

Section: Adaptarse O Adaptarse: El Surgimiento De Nuevos Modelos De N...unclassified

Nuevos desafíos de las pequeñas y medianas empresas en tiempos de pandemia

Gallo

López

Duque

et al. 2022

Tecnura

View full text Add to dashboard Cite

Contexto: Las pymes representan aproximadamente el 50 % del PIB mundial, y debido a la pandemia por la covid-19, se han visto gravemente afectadas. Este documento proporciona un panorama general de factores que incidieron en la economía de las pymes y presenta algunas soluciones para mantener su operación en tiempos de dificultades. Metodología: La elaboración del manuscrito esta soportada en literatura relevante publicada entre 2019 y 2021. La estrategia de búsqueda se aplicó a través de las bases de datos Embase, Web of Sciences, Scopus, bajo términos de búsqueda clave covid-19, pandemic, small enterprises, medium-sized enterprises, global economic, economic growth, developing countries, emerging economies, economic impact, financial fragility, government action*, credit risk, travel restriction*, e-commerce, digital technologie*, digital transformation, emerging market*, supply chain*, small business. Posteriormente, se efectuó la clasificación y análisis documental a través del método Raceer (recopilación, almacenamiento, elaboración esquemática conceptual, enlace de unidades informativas, redacción). Resultados: El análisis de la información relevante reveló que la economía de las pymes cumplió un papel importante en la fuerte caída del PIB y en el aumento de los niveles de pobreza y desempleo a nivel mundial, y que aquellas que querían mantenerse en operación debieron reinventarse e incursionar con nuevas estrategias de negocio. Conclusiones: La pandemia generada por la covid-19 produjo cambios significativos en hábitos de compra, métodos de fabricación y formas de trabajar que impactaron gravemente el desempeño de las pymes. Para lidiar con este nuevo escenario económico, se espera que la tecnología y la innovación direccionen a nuevos modelos de negocio de rápida adaptación.

show abstract

Equity Crowdfunding: Brave Market or Safe Haven for the Crowd During the COVID-19 Crisis?

Cited by 8 publications

References 0 publications

Is restaurant crowdfunding immune to the COVID-19 pandemic?

Is restaurant crowdfunding immune to the COVID-19 pandemic?

Covid-19: Costly Signals and Entrepreneurial Bricolage for Smes Survivability From the View of the Financial-Based Crowdfunding in Malaysia

Nuevos desafíos de las pequeñas y medianas empresas en tiempos de pandemia

Contact Info

Product

Resources

About