Abstract
The internet has revolutionized the financial industry, enabling the emergence of online alternative finance, including equity crowdfunding, which has the potential to democratize financing for startups and SMEs. However, there needs to be more scholarly knowledge about its post-funding effects on firms receiving this type of financing. This paper investigates the role of equity crowdfunding in relation to traditional funding methods. It examines the post-funding effects of successful equity crowdfunding fundraising campaigns on new technology ventures in Europe. The findings suggest that equity crowdfunding is relevant in the commercialization lifecycle stage of new technology ventures and can provide working capital and market data but offers no financial or non-financial benefits. Equity crowdfunding can help solve two out of three major challenges for the venture at the commercialization stage but cannot provide enough capital to help the venture to the next stage, so it will still need investments from professional investors like VCs and angel investors. Equity crowdfunding will be viewed as a negative signal if there is high information asymmetry between the venture and professional investors. The paper has limitations due to its small sample size, language barriers, and lack of direct interviews with crowdfunding platforms or investors. The author suggests future research to conduct a quantitative study in collaboration with crowdfunding platforms to test the findings of this paper and a study examining the macroeconomic effects of equity crowdfunding.
Educations | MSc in Finance and Strategic Management, (Graduate Programme) Final Thesis |
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Language | English |
Publication date | 2023 |
Number of pages | 165 |
Supervisors | Michael Wessel |