Equity crowdfunding: A new social innovation-a regulatory cross-nation study

Abstract

In recent years, crowdfunding has experienced accelerated growth around the world, and it has become a new form of social and financial innovation for new businesses ideas that might be unable to get traditional financing. As a social capital for innovations, crowdfunding has led to the creations of new funding models and business logic for startups. Currently, the major types of crowdfunding models encompass rewards, donation, equity, and debt/leading models. The boom of crowdfunding could be attributed to the emergence of the collaborative economy. Despite its popularity in practice, crowdfunding needs further academic research to fill its research gap. Hence, this paper conducts a cross-national comparison of the equity crowdfunding mechanisms and focuses on regulatory environments by analyzing several equity crowdfunding platforms respectively in the U.S., the U.K., Israel, China, and Taiwan. Through secondary qualitative study, the result reveals that three of the five countries we study (the U.K., Israel, and Taiwan) authenticate the equity crowdfunding to the general public whereas this type of investment is still limited only to accredited investors in the U.S. and China. It is concluded that equity crowdfunding is an alternative capital raising model that will grow and is beneficial for social innovation in the future.