Abstract: Equity crowdfunding is a new financing mode with the advantages of low threshold,high efficiency,and low cost.It provides a financing channel for small and medium-sized enterprises and absorbs the idle funds of the public.However,the emerging mode also faces many problems,such as legal environment,credit system,intellectual property protection,and social cognition,which affect the high-quality development of enterprises and pose risks to investors’ decision-making.Therefore,this article aims to explore the key factors that affect the post-crowdfunding financing performance of equity crowdfunding enterprises,based on the signal theory and using the data from Seedrs equity crowdfunding platform and Crunchbase.We examine the impacts of project characteristics,crowdfunding performance,and advertising effect on the subsequent financing performance of start-ups that completed equity crowdfunding.The subsequent financing performance includes three aspects:whether they can enter the next round of financing,the time required for the next round of financing,and the amount of the next round of financing.
Results show that project characteristics (such as project valuation,target amount,equity share,and policy preference),crowdfunding performance (such as previous financing experience),and the advertising effect (such as the number of investors),all have significant positive effects on the subsequent financing performance(Whether they can enter the subsequent financing, the time required for the subsequent financing or the amount of the subsequent financing).In addition,video introduction length,city level,company operation object,digitalization level,financing completion time,and company age also have certain impacts on the subsequent financing.
In specific,we review the existing literature on crowdfunding,equity crowdfunding,and private equity,and summarize the research gaps and contributions.It points out that most of the existing literature focuses on whether the equity crowdfunding projects can successfully raise funds,but lacks a detailed and reasonable study on whether the financing enterprises can successfully enter the next round of financing,and the subsequent financing performance of the enterprises.
We further propose the research hypotheses based on the signal theory,and analyze the impact of project characteristics,crowdfunding performance,and advertising effect on the subsequent financing performance.It argues that project characteristics,crowdfunding performance,and advertising effect can be regarded as information signals for investors,and the signals from these aspects will greatly affect investors’ decision-making and subsequent financing performance.The positive signals from these aspects can enhance investors’ confidence,attract more funds,and promote the long-term success of equity crowdfunding enterprises.
We collect and process the data from Seedrs equity crowdfunding platform and Crunchbase,and conduct descriptive statistics and regression analysis.The article selects 1,024 equity crowdfunding projects that were successfully completed on the Seedrs platform from January 2012 to December 2019,and matches them with the data from Crunchbase to obtain information of the subsequent financing rounds.Three dependent variables are defined to measure the subsequent financing performance:whether the project can enter the next round of financing,the time required for the next round of financing,and the amount of the next round of financing.Several independent variables are constructed to capture the project characteristics,crowdfunding performance,and advertising effect.We control for some other variables that may affect the subsequent financing performance,such as video introduction length,city level,company operation object,digitalization level,financing completion time,and company age.
The article reports the main results of the regression analysis,and discusses the implications and limitations.The article finds that:
(1)Project characteristics have significant positive effects on the subsequent financing performance.Specifically,project valuation,target amount,equity share,and policy preference all have positive effects on whether the project can enter the next round of financing,the time required for the next round of financing,or the amount of the next round of financing.These results suggest that project characteristics can send positive signals to investors about the project quality and potential return,and affect investors’ evaluation and decision-making on the project.
(2)Crowdfunding performance also has significant positive effects on the subsequent financing performance.Specifically,previous financing experience has a positive effect on whether the project can enter the next round of financing,and the amount of the next round of financing.This result suggests that previous financing experience can send a positive signal to investors about the project’s credibility and ability,and affect investors’ trust and confidence in the project.
(3)Advertising effect also has significant positive effects on the subsequent financing performance.Specifically,the number of investors has a positive effect on the amount of the next round of financing.This result suggests that the number of investors can send a positive signal to investors about the project’s exposure and reputation,and affect investors’ perception and attention to the project.
The article concludes by summarizing the main findings,contributions,and implications,and pointing out the limitations and directions for future research.The article argues that this study provides a systematic empirical analysis of the post-crowdfunding financing performance of equity crowdfunding projects,and reveals the key factors and mechanisms that affect the subsequent financing performance from different aspects.The article also argues that this study has important implications for equity crowdfunding platforms,start-ups,and investors,as well as for policymakers and regulators.The article acknowledges that this study has some limitations,such as the data source,the measurement of variables,and the causal inference,and suggests that future research can further explore the impact of equity crowdfunding on the long-term development and survival of start-ups,and the role of social networks and institutional factors in equity crowdfunding.