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Forecasting success in equity crowdfunding

Author

Listed:
  • Aleksandrina Ralcheva

    (Erasmus University)

  • Peter Roosenboom

    (Erasmus University)

Abstract

This paper analyzes a large dataset of 2171 equity crowdfunding campaigns launched between the years 2012 and 2017 on two of the world’s largest platforms Crowdcube and Seedrs. Our data shows that the equity crowdfunding market has matured: more recent campaigns tend to be launched by larger and older companies with better access to external financing. Given the market’s dynamics, we use a rolling three-year window to forecast funding success and develop a simple model based on information that is available at the time of the campaign (e.g., retained equity, external fundraising before the campaign, accelerator attendance, and information about the directors’ team). Our proposed forecasting method can be beneficial to both platforms and entrepreneurs for improving outcomes on the equity crowdfunding market.

Suggested Citation

  • Aleksandrina Ralcheva & Peter Roosenboom, 2020. "Forecasting success in equity crowdfunding," Small Business Economics, Springer, vol. 55(1), pages 39-56, June.
    • Handle: RePEc:kap:sbusec:v:55:y:2020:i:1:d:10.1007_s11187-019-00144-x
    DOI: 10.1007/s11187-019-00144-x
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    References listed on IDEAS

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    More about this item

    Keywords

    Equity crowdfunding; Success; Forecasting; Entrepreneurial finance;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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