Equity Crowdfunding and Startup Performance

Abstract

This study examines the effect of equity crowdfunding on startup performance. To do so, it uses a novel dataset of equity crowdfunding startups from January 2016 to April 2019 and constructs a sample of matched non-crowdfunding startups. The data indicate that equity crowdfunding startups rather than non-crowdfunding startups are more likely to survive, and conditional on closure, their closing dates are later than those of non-crowdfunding startups. Equity crowdfunding startups also show higher growth. The positive effects of equity crowdfunding are observed mainly in equity offerings, but not in debt offerings. Additional analyses indicate that expert investors are crucial for startup performance at least by facilitating access to external funding.