Investment-based Crowdfunding Research Articles

Investors’ acceptance and use of investment-based crowdfunding platforms: an integrated perspective

Investors’ acceptance and use of investment-based crowdfunding platforms: an integrated perspective

Investment-Based Crowdfunding Platforms and Their Regulation

Investment-Based Crowdfunding Platforms and Their Regulation

Regulation of Investment-based Crowdfunding in Nigeria: a Review of the Rights, Obligations and Liabilities of Investors, Fundraisers and Intermediaries

Regulation of Investment-based Crowdfunding in Nigeria: a Review of the Rights, Obligations and Liabilities of Investors, Fundraisers and Intermediaries

APPLICATION OF CROWDFUNDING AS AN ALTERNATIVE SOURCE OF PROJECT FINANCING IN EU COUNTRIES - ASSUMPTIONS OF ITS DEVELOPMENT IN BOSNIA AND HERZEGOVINA AND CROATIA

A new economic trend in the financing of projects, start-ups, innovative projects and many other projects from various fields (music, film, games) is widespread today and its called crowdfunding or group financing. With the development of new technologies, and thus social networks around the world, it creates the possibility and potential advantage of associating around the world in raising funds in an alternative way. Crowdfunding can be organized in several forms or models. The basic division is the one that is carried out by the European Commission: Reward-based crowdfunding, Donation-based crowdfunding, Share-based crowdfunding and Investment-based crowdfunding. The crowdfunding market is constantly growing. As conditions for traditional funding become more stringent, crowdfunding could be a potential key to success. Prospects for the development of crowdfunding in Bosnia and Herzegovina and Croatia are reflected in the legal regulation of this method of financing, which would facilitate administrative work, reduce handling costs and create legal certainty. Following the established regulations, intensive attention should be dedicated to the promotion of crowdfunding and "raising awareness" of citizens, pointing out the possible benefits and advantages that it offers. This will take some time, so that in the foreseeable future, alternative financing of crowdfunding will gain in importance in Bosnia and Herzegovina and Croatia.

The New Financial Crowdfunding Regulation and Its Implications for Investment Services under MiFID II

The new European Crowdfunding Service Providers Regulation aims at harmonizing the financial crowdfunding regulatory framework in the EU. In many respects inspired by MiFID II, it draws a distinction between crowdfunding services and investment services, but at the same time raises new questions. It seems the Regulation might have a significant impact on how the content of investment-based crowdfunding as well as individual investment services is to be interpreted. The paper aims firstly to analyse the scope of the new Regulation, with special attention to the exemptions set by the Regulation itself as well as those originating from the EU financial services regulatory architecture. Secondly, it evaluates the relationship between investment-based crowdfunding and investment services under MiFID II, namely the reception and transmission of orders and placing on no-commitment basis, in order to distinguish the respective types of activities. Attention is given particularly to the simultaneous provision of reception and transmission of orders and placing on the no-commitment basis as a conceptual characteristic of financial crowdfunding. Finally, the consequences the Regulation might have for the interpretation of scope and content of certain present investment services under MiFID II are analysed. Namely, placing on the no-commitment basis, investment advice and portfolio management are put under scrutiny.

How environmental and social orientations influence the funding success of investment-based crowdfunding: The mediating role of the number of funders and the average funding amount

Environmentally and socially oriented ventures have great potential for contributing to sustainable development. Many expect crowdfunding to be able to unleash this potential by providing financial resources for such entrepreneurs. Thus, the present research investigates how different degrees of environmental and social orientation of ventures influence their success in investment-based crowdfunding. It uses and specifies warm glow theory to quantitatively analyse 318 investment-based crowdfunding projects from the USA and Germany. The results highlight that higher levels of environmental orientation increase crowdfunding success, while no significant influence is observed concerning social orientation. This positive impact of environmental orientation is mediated by the number of funders attained by a particular project. Interestingly, the influence of environmental orientation on funding success is found to be particularly strong in the USA. Based on these findings, this research draws recommendations for environmental entrepreneurs, crowdfunding platforms and policy, as well as for future research. For example, environmental entrepreneurs are advised to prominently communicate the environmental orientation of their ventures in investment-based crowdfunding campaigns, and to increase the visibility of their campaigns, as these are potentially attractive to a huge number of funders.

소비자의 보상형 및 증권형 크라우드펀딩 참여현황 및 참여의도에 관한 연구

소비자의 보상형 및 증권형 크라우드펀딩 참여현황 및 참여의도에 관한 연구

THE ROLE OF INVESTMENT-BASED ISLAMIC CROWDFUNDING FOR HALAL MSMEs: EVIDENCE FROM INDONESIA

Investment-based crowdfunding can be used as an alternative financing tool for Micro, Small and Medium Enterprises in Indonesia. Since the population in Indonesia is dominated by Muslim, Islamic financial technology companies that provide crowdfunding services are continue to emerge and develop. The development of these services also encourages the progress of the halal industry because both have integrated relationships. However, not all funding campaigns for crowdfunding services are successful. This study aims to analyze the development of Islamic crowdfunding business in Indonesia and factors affecting the success of funding campaigns in these services using multiple linear regression methods. Primary data obtained through interviews and literature review while secondary data is collected from 39 funding campaigns in 4 Islamic crowdfunding online services. It was found that the regulation of Islamic financial technology did not yet exist though in practice it was already widely found. On the other hand, crowdfunding models in Indonesia still need improvement in its scheme. By using a quantitative approach, it was found that funding target, campaign duration, payback periods and rate of return have a positive effect on campaign success, while a minimum amount of investment has a negative effect which means the minimum amount of investment available in the crowdfunding service is appropriate. After conducting research with a qualitative and quantitative approach, SWOT analysis was conducted at the end of the study to find out the challenges and opportunities for the halal industry in utilizing such Islamic crowdfunding service.

Profit allocation in investment-based crowdfunding with investors of dynamic entry times

Even distribution is a normal profit allocation mechanism for investment-based crowdfunding projects on many platforms. In other words, the investors with the same pledging funds will be paid evenly when the investment ends. The even allocation mechanism works well under the assumption that the investors arrive at the platform simultaneously. However, in practice, the investors are sequential, therefore, the stories are different when considering the dynamic entry times of the investors. In this paper, we study ways to design appropriate profit allocation mechanisms to enhance the success rate of an investment-based crowdfunding project. The basic model focuses on the two-investor case, where only two investors with dynamic entry times are considered. The profit allocation mechanism is shown to have great impacts on the pledging probabilities of investors, as well as the success rate of a project. After that, we shift our focus to the two-cohort case, where dynamic investors are assumed to arrive at the platform as two sequential cohorts. By taking the sizes of each cohort into consideration, we are able to analyze the success rate of a project under various practical situations. Finally, we implement some numerical experiments to generalize our studies to the situations where (i) there are more than two pledging periods for the investors, (ii) the herding effect of the investors is considered, and (iii) the valuations of the investors are assumed to be normally distributed. Our main results still hold under these general situations.

Fintech: tra piattaforme di crowdfunding, valute virtuali e contrasto del riciclaggio

The essay briefly describes the Fintech phenomenon. More specifically, it analyses investment-based crowdfunding, lending-based crowdfunding and virtual currencies and the legislative solutions for these activities, in particular from the point of view of the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

Modelling the crowdfunding technology adoption among novice entrepreneurs: an extended tam model

Computer-mediated crowdfunding is deemed as an emerging technology used by novice entrepreneurs to solicit funds from other individuals in order to easily gather fundraising for their innovative ideas. However, lack of information on the attributes of crowdfunding platforms coupled with the lack of the knowledge about the techniques of use of these technologies make this fundraising tool not very effective. In this study, we try to elucidate, despite the unprecedented infatuation with the investment-based crowdfunding, key factors influencing the intention of Tunisian entrepreneurs to adopt crowdfunding platforms as a main tool of fundraising. The research model was based on an extended Technology Acceptance Model (TAM) with the integration of three new variables: perceived risk with service, perceived risk with transaction and plagiarism risk. The results shows that, both perceived risk with service, perceived risk with transaction and plagiarism risk have a negative impact on entrepreneurs’ use of crowdfunding platforms, while perceived usefulness and perceived trust influence positively entrepreneurs’ intention behavior. Perceived risks with crowdfunding service and transaction are affected by financing risk, security concerns and psychological factors, while plagiarism risk is influenced by information concerns, perceived control.

The geography of initial coin offerings

Initial coin offerings (ICOs) are a rapidly growing phenomenon wherein entrepreneurial ventures raise funds for the development of blockchain-based businesses. Although they have recently sprouted up all over the world, raising millions of dollars for early-stage firms, few empirical studies are available to help understand the emergence of ICOs across countries. Based on the population of 915 ICOs issued in 187 countries between January 2017 and March 2018, our study reveals that ICOs take place more frequently in countries with developed financial systems, public equity markets, and advanced digital technologies. The availability of investment-based crowdfunding platforms is also positively associated with the emergence of ICOs, while debt and private equity markets do not provide similar effects. Countries with ICO-friendly regulations have more ICOs, whereas tax regimes are not clearly related to ICOs.

NOTAS SOBRE O CROWDFUNDING NO DIREITO BRASILEIRO

Este estudo pretende analisar a disciplina das diversas modalidades de crowdfunding utilizadas no Brasil, a partir de pesquisa qualitativa, aplicada e exploratória, com base em revisão bibliográfica e análise legislativa, por meio do método lógico-dedutivo. Como se verá, a grande dificuldade enfrentada pelos agentes que desejam se valer dessa modalidade de financiamento é a ausência de regras claras e precisas que disciplinem a matéria, uma vez que há apenas duas regulamentações específicas sobre o tema: uma relativa ao investment-based crowdfunding, editada em julho de 2017, e outra concernente ao donation-based crowdfunding para financiamento de campanhas eleitorais, editada em outubro de 2017. Por essa razão, faz-se necessário buscar na legislação esparsa – sobretudo, no Código Civil – as regras aplicáveis aos contratos celebrados entre investidores, plataformas e desenvolvedores do projeto, o que tem gerado certa insegurança jurídica. Este artigo se propõe, com efeito, a identificar a disciplina incidente nas diversas modalidades de crowdfunding, esclarecendo os direitos e os deveres que tocam a cada um dos agentes envolvidos na operação.

Voting rights delivery in investment-based crowdfunding: a cross-platform analysis

This is one of the first studies to investigate corporate governance in investment-based crowdfunding. Our cross-platform analysis reveals a large variety in corporate governance mechanisms, in particular with regard to voting rights delivery. Some platforms assign voting rights to individual investors, some work under a nominee structure, and some require the involvement of accredited investors to list offerings. Using a sample of 185 investment-based crowdfunding portals based in Australia, Austria, Canada, France, Germany, Italy, New Zealand, the UK and the US, we find that the delivery of individual voting rights is associated with lower chances of success of the platforms, whereas the delivery of pooled voting rights is not significant. Fewer offerings are listed in syndicate-like platforms.

The Geography of Initial Coin Offerings

Initial coin offerings (ICOs) are a rapidly growing phenomenon wherein entrepreneurial ventures raise funds for the development of blockchain-based businesses. They have recently sprouted up all over the world, raising millions of dollars for early-stage projects. Few empirical studies are available to help understand the emergence of ICOs across countries. Based on the population of 915 ICOs issued in 187 countries between January 2017 and March 2, our study reveals that ICOs take place in countries with developed financial markets and advanced digital technologies. The availability of investment-based crowdfunding platforms also plays a significant role in the emergence of ICOs, while venture capital and private equity markets do not provide similar effects. Countries with ICO-friendly regulations have more ICOs, whereas tax regimes are not among the main drivers of ICOs.

Voting Rights Delivery in Investment-Based Crowdfunding: A Cross-Platform Analysis

Voting Rights Delivery in Investment-Based Crowdfunding: A Cross-Platform Analysis

What do crowdfunding platforms do? A comparison between investment-based platforms in Europe

Despite the growing popularity of investment-based crowdfunding, we know little about what platforms do before the campaign. This is among the first studies to provide cross-platform evidence on investment-based crowdfunding. First, we describe the regulation and development over time of investment-based crowdfunding markets in France, Italy, Germany, and the UK. Second, using a sample of 127 platforms in these countries, we document which services are offered to proponents before, during, and after the campaigns. Finally, our econometric analysis shows that a higher number of post-campaign services offered by the platforms increase the annual number of successful campaigns. Services offered before and during campaigns do not attract more campaigns to the platforms.

What Do Crowdfunding Platforms Do? A Comparison between Investment-Based Platforms in Europe

Despite the growing popularity of investment-based crowdfunding, we know little about what platforms do before the campaign. This is one of the first studies to provide cross-platform evidence on investment-based crowdfunding. First, we describe the regulation and development over time of investment-based crowdfunding markets in France, Italy, Germany and the UK. Second, using a sample of 127 platforms in these countries, we document which services are offered to proponents, before, during and after the campaigns. Finally, our econometric analysis shows that a higher number of post-campaign services offered by the platforms increases the annual number of successful campaigns. Services offered before and during the campaign do not attract more campaigns to the platforms.

Determinants of Individual Investment Decisions in Investment-Based Crowdfunding

We investigate determinants of investment decisions in investment-based (equity and real estate) crowdfunding, using a novel investment-, investor- and campaign-level database. We find that this market is a man's world, with nearly 93% of investments made by men. Consistent with behavioral and finance theories, we find that women invest less in the riskiest investments but more in safer ones. Further analyses show that these findings are better explained by differences in risk aversion than differences in overconfidence between men and women. Investors located in an area considered more "sociable" (socially friendly) also invest more, but only if the investor is a woman. Overall, the findings contribute to our understanding of how investment-based crowdfunding can be a viable source of entrepreneurial finance and how entrepreneurs' campaign decisions affect investor participation.

Crowdfunding

The EU regulators have defined crowdfunding as a means of raising finance for projects from „the crowd“, often by means of an internet-based platform through which project owners „pitch“ their idea to potential backers, who are typically not professional investors. The benefit appreciated by the regulators is providing funds for projects which are normally not tackled by banks or other professional financial institutions, at least not at reasonable prices, due to related risks or small size. There are two commercial types: lending (commonly known as peer to peer lending) and investment-based crowdfunding, providing functions normally reserved to strictly regulated institutions such as banks and investment firms. The international standardsetting bodies refrained from proposing a common international approach at this stage, highlighting that most regulatory regimes for crowdfunding have only recently been implemented. As the general frameworks on banking and securities regulation have not been designed with the crowdfunding industry in mind, and as their application highly depends on individual business models, some convergence is desirable from a regulatory perspective in order to avoid regulatory arbitrage, create a level-business field and ensure that market participants can have confidence on a reliable basis. Further, as an internet-based activity, crowdfunding has a strong potential for cross-border activities. The different national frameworks, even within the EU, are one of the key challenges posed to international platforms that wish to act globally. This is why a moderate regulation on the basis of minimum harmonisation might be in the best interest of the new developing industry.