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Access to digital finance: Equity crowdfunding across countries and platforms

Author

Listed:
  • Saul Estrin

    (Lucas College and Graduate School of Management, San José State University, London School of Economics)

  • Susanna Khavul

    (London School of Economics)

  • Alexander S. Kritikos

    (DIW Berlin, CEPA, University of Potsdam, IZA, IAB)

  • Jonas Löher

    (Institut für Mittelstandsforschung Bonn)

Abstract

Financing entrepreneurship spurs innovation and economic growth. Digital financial platforms that crowdfund equity for entrepreneurs have emerged globally, yet they remain poorly understood. We model equity crowdfunding in terms of the relationship between the number of investors and the amount of money raised per pitch. We examine heterogeneity in the average amount raised per pitch that is associated with differences across three countries and seven platforms. Using a novel dataset of successful fundraising on the most prominent platforms in the UK, Germany, and the USA, we find the underlying relationship between the number of investors and the amount of money raised for entrepreneurs is loglinear, with a coefficient less than one and concave to the origin. We identify significant variation in the average amount invested in each pitch across countries and platforms. Our findings have implications for market actors as well as regulators who set competitive frameworks.

Suggested Citation

  • Saul Estrin & Susanna Khavul & Alexander S. Kritikos & Jonas Löher, 2024. "Access to digital finance: Equity crowdfunding across countries and platforms," CEPA Discussion Papers 72, Center for Economic Policy Analysis.
    • Handle: RePEc:pot:cepadp:72
    DOI: 10.25932/publishup-62326
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Equity crowdfunding; Soft information; Entrepreneurship; Finance; Financial access and inclusion;
    All these keywords.

    JEL classification:

    • D26 - Microeconomics - - Production and Organizations - - - Crowd-Based Firms
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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