The Role of Equity Crowdfunding in Financing SMEs: Evidence from a Sample of European Platforms

Crowdfunding is a new phenomenon that has been growing rapidly and consistently. Crowdfunding can be defined as an open call to the public to finance specific projects. It refers to a way of raising money from a multitude of people, often living in different geographical areas, to finance a project, usually through an online platform that acts as an intermediary. The focus of the chapter is equity crowdfunding that could become a new funding source for small and medium-sized enterprises (SMEs), and for businesses in the seed as well as start-up stage. To assess the fundraising potential of equity crowdfunding for SMEs and start-up firms, the chapter analyses the organisational structure and the business model of a sample of equity crowdfunding platforms active in the European Union and then presents an analysis of the features of a sample of funding campaigns seeking funds on the platforms previously selected. The aim is to investigate whether there are significant factors that make a funding round successful.