Abstract
This paper focuses on the role of signaling in equity crowdfunding by examining the determinants of funding success in the Italian context. By using a unique dataset of 191 successful and unsuccessful campaigns, launched between January 2014 and November 2018 on the leading Italian equity crowdfunding platforms, we analyze the signaling role played toward external investors by the disclosure of financial information, the share of equity retained by founders and by the size of their social networks. Our results show that the disclosure of financial information, the share of equity retained by entrepreneurs and the their social capital have a positive and significant impact on funding success and are interpreted as quality signals of crowdfunding campaigns by external investors.
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Notes
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SiamoSoci was the first equity crowdfunding platform created in Italy. More than 2 years after its establishment, the Consob Regulation no. 18592 entered into force. This regulation included a set of rules and requisites for the managers of equity crowdfunding platforms aimed at reducing operational and legal risks and the risk of litigation and fraud. The regulation also established a register where platforms had to be included to be allowed to use the label “equity crowdfunding platforms”. In light of the new Italian regulation, SiamoSoci could not use the label equity crowdfunding platform anymore and in 2014, it started changing its activity to become a marketplace for entrepreneurs searching funds for their activities, by creating the platform “Mamacrowd”.
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Battaglia, F., Busato, F., Manganiello, M. (2020). Signaling Success Factors in Alternative Entrepreneurial Finance. In: Cruciani, C., Gardenal, G., Cavezzali, E. (eds) Banking and Beyond. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-45752-5_8
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