CROWDFUNDING WITH AN ACCENT

PurposeThe purpose of this paper is to explore whether and how the innovation performance of start-ups and small and medium-sized enterprises (SMEs) that collect funds using equity crowdfunding (EC), i.e. creators (or proponents), and the EC performance are influenced by the social media networks (SMNs) in which EC platforms' managers and firms exchange their ideas with investors and customers.Design/methodology/approachThe empirical analysis is conducted on a sample composed by all the creators that collected funds in EC platforms over the three-year period 2018–2020. For each creator, the innovation performance is computed as the percentage of sales from new or significantly improved product and services compared to total sales of firm. For each campaign, the EC performance is considered as the ratio between the total amount of funding raised at the end of the campaign and the target capital for the campaign. To investigate EC platform social media activity, LinkedIn profiles of EC platforms managers are analyzed using the social network analysis (SNA) methodology, which permits to observe the quantity and the quality of managers' interactions with other users. A regression analysis is thus performed to observe the relationship between managers' LinkedIn activities, EC performance and creators' innovation performance.FindingsData reveal that EC platforms managers display different activities in networking, with some individuals more active than others and more oriented to interact with business profiles rather than personal ones. The variables related to managers' LinkedIn activities are shown to impact both on the EC performance and on the ability of creators to innovate, suggesting the existence of a link between creators, EC platforms and the activity of the subject who manages it.Originality/valueThe present study is the first to examine the link between the ability of creators to innovate and SMNs, focusing on the social links of platforms managers and considering the LinkedIn social media; moreover, the analysis is conducted analyzing the quality of the interactions in addition to their number. The study is original also in that rather than focusing on specific EC platforms it considers all those purposefully authorized by the Italian financial market supervisory authority over a three-year time span. From a managerial point of view, the observation of the relevance of social networks by personnel with specific professional skills reveals it can be a successful driver for operators in the sector, not only to safeguard their reputation, but to stimulate the processes of co-creation of value that is essential in the crowdfunding market.

ABSTRACTThe Chinese experience shows that equity crowdfunding (ECF) platforms are not neutral intermediaries in linking investment opportunities with sources of funds. This article contends that, in the context of the Chinese market, private ordering alone will not address the agency and information asymmetry problems inherent in ECF platforms. The contractual designs adopted by numerous Chinese platforms, especially that of the syndicate contract, not only fail to address the conflicting interests but also introduce additional conflicts. Other market mechanisms such as reputation, exit and private insurance, are also insufficient to ensure investor protection. Therefore, this article proposes specific regulatory measures to enhance investor protection.

Equity crowdfunding is a new innovation in finance, which is an external product of financial technology, by combining financial systems with information technology. Equity crowdfunding is a combination of investment business model with information technology, where meetings between investors and fund managers are conducted online through websites on this platform. Crowdfunding equity platform is now growing rapidly and is very popular among the community, due to some of the facilities offered by the platform organizers for service users. Therefore, further research needs to be done on this business practice, which covers all aspects of the mechanisms and systems on this platform. The purpose of this study is to determine the mechanisms and systems of all aspects of the investment cooperation agreement model applied on the equity crowdfunding platform. The intended aspects include the mechanism of agreement (contract), profit sharing system, user protection, stock trading mechanism, dispute resolution, risk management, and so on. Furthermore, it aims to determine its compliance with Islamic law and the positive laws that apply in Indonesia. Investment agreements on equity crowdfunding platform can be implemented in mudharabah agreement, meanwhile, the agreement between the crowdfunding service provider and the crowdfunding user can use the wakalah bil ujrah contract. The percentage to revenue ratio can use the profit and loss distribution system and the revenue distribution system according to the agreement. Equity crowdfunding platform should really pay attention to consumer protection in accordance with the provisions in accordance with POJK and hifdzul maal theory. In addition, it must carry out risk management to minimize the occurrence of losses for some parties, and create a dispute resolution mechanism in accordance with Islamic law and economic law.

The evolution of equity crowdfunding: Insights from co-investments of angels and the crowd

Ever since Kickstarter, Indiegogo, and others launched crowdfunding platforms, there has been great demand for crowdfunding to move beyond in-kind rewards to equity, so that a broader group of people might share in the returns of the “next big idea.” However, for the vast majority of people, getting in on the ground floor of an innovative, new startup via owning shares was not just out of reach, but out of bounds as well. To protect people from investing more than they could afford to lose and to guard against fraud, U.S. Securities laws made it illegal for early-stage startups to sell shares to regular people through online platforms. That is all about to change. Today, implementing rules for Title III go into effect, allowing for the first time, startups to solicit funds from anyone in exchange for shares via online platforms. However, the question remains, are equity crowdfunding platforms likely to attract the next “billion-dollar startup” and offer real opportunities for everyday investors to share in the profits? This policy brief considers this question through the emerging field of innovation science, applying a simple economic analysis to evaluate the likely impact and effect of the new equity crowdfunding rules. In short, the briefing finds: 1) Title III is not likely to provide either everyday investors or high-growth startup founders with significant new markets for funding the “next great idea”; 2) Title III could lead to novel opportunities for investment and experimentation, opening new avenues of funding for small businesses, means of building a committed user base, and vehicles for marketing and branding; 3) Through experimentation with new market design rules, data streams (e.g. integration with verifiable growth metrics) and milestone-based funding, equity crowdfunding platforms could improve the quality and type of startups they are able to attract; 4) Regulators should not lose sight of Title II — the provision of the JOBS Act permitting accredited investors to use equity crowdfunding — as an alternative pathway for achieving some of Title III’s initial goals. While equity crowdfunding under Title III may not evolve as many may have originally hoped, it still may bring new forms of capital to small businesses and offer new and beneficial ways for people to connect with companies and causes about which they are passionate.

Equity crowdfunding: First resort or last resort?

IntroductionThe processing of a foreign accent is known to increase cognitive load for the native listener, establish psychological distance with the foreign-accented speaker, and even influence decision-making. Similarly, research in the field of emotional processing indicates that a foreign accent may impact the native listener's emotionality. Taking these aspects into consideration, the current study aimed to confirm the hypothesis that a foreign accent, compared to a native accent, significantly affects the processing of affective-laden words.MethodsIn order to test this hypothesis, native Spanish speakers participated in an online experiment in which they rated on a Likert scale the valence and arousal of positive, neutral and negative words presented in native and foreign accents.ResultsResults confirm a foreign accent effect on emotional processing whereby positively valenced words are perceived as less positive and negatively valenced words as less negative when processed in a foreign accent compared to a native accent. Moreover, the arousal provoked by emotion words is lesser when words are processed in a foreign than a native accent.DiscussionWe propose possible, not mutually exclusive, explanations for the effect based on linguistic fluency, language attitudes and the linguistic context of language acquisition. Although further research is needed to confirm them, these explanations may be relevant for models of language comprehension and language learning. The observation of a reduction in emotionality resulting from a foreign accent is important for society as important decisions are made by representatives with diverse language and accent backgrounds. Our findings demonstrate that the choice of the language, which entails speaking in a native or a foreign accent, can be crucial when discussing topics such as the consequences of wars, pandemics, or natural disasters on human beings.

Equity crowdfunding is one type of crowdfunding that is growing rapidly in Indonesia. Equity crowdfunding can be considered for start-ups and Small and Medium Enterprises (SMEs) because the costs are relatively cheaper than loans. But until now, there are no regulations governing Shariah compliance in applying equity crowdfunding in Indonesia. This chapter aims to analyze the operation of equity crowdfunding companies in Indonesia to evaluate equity crowdfunding in terms of the Shariah compliance model with qualitative and quantitative approaches. This chapter is a qualitative research with inductive and deductive analysis by assessing Shariah compliance aspects in Small and Medium Enterprises (SMEs). The data used are primary and secondary, and the researcher carried the data collection techniques directly to the equity crowdfunding platform. In contrast, secondary data are from the existing literature. For the core businesses run by SMEs in equity crowdfunding in Indonesia, 154 SMEs registered on the equity crowdfunding platform. According to qualitative analysis, all companies are by Shariah rules, where Shariah prohibits no activities. However, in quantitative terms, no specific regulations require listed businesses to follow. This research provides results about the equity crowdfunding system in Indonesia analysis of Shariah compliance in terms of qualitative and quantitative aspects of SMEs registered on equity crowdfunding platforms in Indonesia.

PurposeConsidering the unique characteristics of equity crowdfunding platforms including the removal of stringent structural barriers (e.g. lack of co-location), high visibility and traceability of investor characteristics, large pool of available investors and simplified transaction process, the authors aim to examine how the two most prevalent mechanisms (i.e. homophily and repeated ties) unfold in this context by incorporating the contextual characteristics. The authors theorize an inverted U-shaped relationship between leader-backer similarity and the likelihood of co-investment in a syndicate on equity crowdfunding platforms. In addition, a leader–backer dyad is more likely to form new syndicates if the students have more prior co-investment ties.Design/methodology/approachThe empirical study is based on data from the AngelList syndicate platform and a linear probability model (LPM) with fixed effects is adopted to estimate the syndicate formation.FindingsThe authors find that the similarity between a leader and a backer has an inverted U-shaped relationship with the leader and backer's likelihood of co-investment in a syndicate, which is different from the dominant homophily-based tie formation in venture capital (VC) syndicates and other digital platform contexts. Although equity crowdfunding platforms encourage the possibility of exploring new partners, investors are more likely to co-invest with others who have stronger prior ties.Originality/valueThis research theoretically contributes to the scant literature of equity crowdfunding syndicates by contextualizing two most prevalent mechanisms (i.e. homophily and repeated ties) driving tie formation in VC syndicates and digital platforms.

This research analyzes the factors that influence the decision to use the equity funding platform in Indonesia. Equity crowdfunding platform is a platform that organizes the crowdfunding process, where investors will receive an equity instrument that provides a share of ownership or a share of future income. This research model is compiled based on the merging of previous research models related to the intention to use the equity funding platform, such as Financing Objectives, Number of Shares Assigned, Number of Inquiries, Familiarity with the Company or Its Product, Target Attractiveness and Campaign Specification. Sources of data were collected from respondents using the equity crowdfunding platform who are JABODETABEK people through a questionnaire, and obtained 428 respondents. The data were analyzed using the SmartPLS 3, and the results show that the variable Familiarity with the Company or Its Product and Target Attractiveness affects people's decisions in using the equity crowdfunding platform.

The new investment landscape: Equity crowdfunding

Among the new ventures actively seeking funds through equity crowdfunding, only a lucky few seemingly survive the rigorous selection process imposed by equity crowdfunding platforms (ECFPs). With a conjoint experiment involving decision-makers from 50 platforms in 22 countries, this study provides first quantitative evidence regarding how ECFPs actually use quality signals to select new ventures to start fundraising campaigns. The ECFPs interpret signals differently, depending on whether they impose a co-investment requirement or generate revenues from new ventures’ long-term performance. The effectiveness of the signals also is contingent on the applicant’s industry background and the signals’ accessibility in the country where the ECFP operates.

Crowdfunding platforms are increasingly used as a means of attracting investment, donations or loans to finance projects, companies, organizations and causes. In equity crowdfunding, the investor acquires a stake in a company or project and is remunerated according to its success. This article aims to demonstrate how Distribuited Ledger Technology (Blockchain) can help mitigate some of the problems associated with equity crowdfunding platforms or even add features and capabilities, making them more appealing to fundraisers and investors. Through the design and modeling of an equity crowdfunding platform that uses a deconcentrated ledger to record the transactions that took place there, with the capacity to load and execute smart contracts, it was possible to verify that blockchain technology can create value in this type of platform, being able to mitigate or even solve some of the problems associated with this type of crowdfunding.

What's in a logo? The impact of complex visual cues in equity crowdfunding

This study aims to determine and test the effect of intellectual capital signals and the level of uncertainty on the success of funding on equity crowdfunding platforms that are officially registered with the financial services authorities in Indonesia. The population of this study is prospectuses for open offers made by MSMEs on equity crowdfunding platforms in Indonesia in 2019 – 2021, with a total of 147 prospectus observation data. The sampling technique used is purposive sampling, which is a sampling technique with specific criteria. Multiple regression analysis is the method to test the hypothesis. This study argues that intellectual capital and the uncertainty presented in an open offer in equity crowdfunding can be perceived by novice investors or crowd funders as a signal of business quality and encourages them to invest and meet funding targets by exploiting the role of signalling theory in reducing information asymmetry. The study results show that only business alliances indicate intellectual capital, and financial projections indicate the level of uncertainty that has a positive and significant effect on the number of funds that indicate successful funding. Meanwhile, business experience and product innovation, indicators of intellectual capital, and date debt, indicators of uncertainty, have no significant effect. Based on these findings, the success of equity crowdfunding, officially registered in Indonesia, is influenced by business alliances and financial projections. This research provides valid implications for entrepreneurs, platform managers, and policymakers/authorities. Keywords: funding success, equity crowdfunding, intellectual capital, level of uncertainty