Kunnskapsverkets litteraturdatabase

Authors provide a preliminary exploration of equity-based crowdfunding underlying economics. They highlight the extent to which economic theory, in particular transaction costs, reputation, and market design, can explain the rise of non-equity crowdfunding and offer a framework for speculating on how equity-based crowdfunding may unfold. They conclude by articulating open questions related to how crowdfunding may affect social welfare and the rate and direction of innovation.

Due to internet facilitates instant and inexpensive communication, online crowdfunding generates a broad dispersion of investors in small and early-stage projects. This contrasts with existing theories that predict entrepreneurs and investors will be co-located due to distance-sensitive costs. This study examines the crowdfunding platform Sellaband, which finances early stage musical projects. 

The average distance between artists and investors is about 5,000 km, suggesting a reduced role for spatial proximity. Still, within a single round of financing, local investors invest relatively early, and they appear less responsive to decisions by other investors. This geography effect is driven by investors who likely have a personal connection with the artist-entrepreneur (“family and friends”). Although the online platform seems to eliminate most distance-related economic frictions such as monitoring progress, pro-viding input, and gathering information, it does not eliminate social-related frictions.

This paper deals with microfinance and focus on two of its main tools – microcredit and crowdfunding. The microfinance system seems to be another way to think globalization. But is it really an alternative? It seems to have socio-economic impacts that distinguish it from the traditional financial system and make it more sustainable. But authors will discuss the limits of this new model. They will see that this system is also globalized and that it finally deals with the same issues and challenges of the traditional credit institutions - governance, regulation, and transparency.

This research aims to understand the role played by social entrepreneurs’ personality traits on the choice between the traditional donation model and social crowdfunding (CF) to finance social projects. Social CF is examined as an instrument to capture funds for social projects, and the particular case of the Portuguese Social Stock Exchange (PSSE) is presented. The investigation reveals that the agreeableness and neuroticism factors were not even considered in the results of the factorial analysis, which indicates the minor importance of these personality traits in the funding decisions of the Portuguese social entrepreneurs. The same applies to the factors of openness to new experiences and extraversion, which, although considered in the logistic analysis, showed no statistical significance. Finally, the conscientiousness personality trait seems to be the only factor that might explain the use of the PSSE platform.

In this paper, the authors aim at learning more on what determines the probability of a project to reach the target funding. They apply the lens of social capital, defined by the goodwill available to her/him from the structure and content of his/her social relations. In particular they distinguish between ‘individual’ (exclusive) and ‘territorial’ (locally shared) social capital. They test their hypotheses by running Probit estimates on a sample of 461 crowdfunding projects posted by 699 proponents and hosted on 11 Italian crowdfunding platforms.  This methodology puts in evidence that in a framework with information asymmetry individual social capital (ISC) is positively and significantly correlated with the probability of success of a crowdfunding project. On the contrary, authors do not find any significant correlation with the diffused territorial social capital (TSC).

This paper provides a systematization of what it is known on crowdfunding, which can be useful to scholars, practitioners, and policymakers interested in the phenomenon from different angles. It first reviews the emergent literature on the theme to single out the aspects that so far have attracted the bulk of scholarly interest. Then, it compares the crowdfunding with other forms of entrepreneurial finance. Finally, it offers a first survey on Italian crowdfunding platforms.

In this study, the authors evaluate the influence of linguistic content on fundraising outcomes, above and beyond type of product or service offered. Online fundraising settings pose an interesting empirical puzzle: women are systematically more successful than men, an outcome contrary to offline gender inequality. They propose that this outcome is partially explained by linguistic differences between men and women in terms of language they use, and they test this mechanism using data from the online crowdfunding platform Indiegogo. The results support their theory, suggesting a link between micro-level linguistic choices and macro level outcomes: the institution of crowdfunding may reduce gender inequalities in the fundraising arena by benefitting the communication style of women.

Using data from crowdfunding, the authors empirically examine whether higher proportions of female funders lead to higher success rates in capital-raising for women. They find that women outperform men, and are more likely to succeed at a crowdfunding campaign, all other things being equal. Surprisingly, this effect primarily holds for female founders proposing technological projects, a category that is largely dominated by male founders and funders. This finding stands in stark contrast to expectations concerning homophily. A laboratory experiment helps explain how this pattern might emerge and allows us to theorize about the types of choice homophily driving results. They find that a small proportion of female backers disproportionately support women-led projects in areas where women are historically underrepresented. This suggests an activist variant of choice homophily, and implies that mere representation of female funders without activism may not always be enough to overcome the barriers faced by female founders.

This article discusses why securities offerings using crowdfunding should not be exempted from the registration requirements of the federal securities laws in USA. First, it introduces the concept of crowdfunding and the five different categories of crowdfunding. Then it discusses the registration requirements under the Securities Act of 1933, why registration is not feasible for most crowdfunded ventures, and the conflicts between crowdfunding and the current registration exemptions. Finally, the article discusses why crowdfunding should not be exempted from the registration requirements, specifically focusing on how such an exemption would severely weaken investor protections and open the door for fraud to permeate the market.

This article addresses crowdfunding, a relatively new form of informal financing of projects and ventures. It describes its principle characteristics and the range of players in this market. The different business models of crowdfunding intermediaries are explored and illustrated. A first attempt is made to classify the different forms of funding and business models of crowdfunding intermediaries. Based on the available empirical data the paper discusses the economic relevance of crowdfunding and its applicability to start-up financing and funding creative ventures and research projects.