Characteristics of Successful Securities Crowdfunding Campaigns in the United States

William Frank Wright, Margaret MacFarlane Wright

Source Title: Multidisciplinary Approaches to Crowdfunding Platforms

ISBN13: 9781799832263|ISBN10: 1799832260|ISBN13 Softcover: 9781799832270|EISBN13: 9781799832287

DOI: 10.4018/978-1-7998-3226-3.ch007

MLA

Wright, William Frank, and Margaret MacFarlane Wright. "Characteristics of Successful Securities Crowdfunding Campaigns in the United States." Multidisciplinary Approaches to Crowdfunding Platforms, edited by Carla Sofia Vicente Negrão and João António Furtado Brito, IGI Global, 2021, pp. 163-197. https://doi.org/10.4018/978-1-7998-3226-3.ch007

APA

Wright, W. F. & Wright, M. M. (2021). Characteristics of Successful Securities Crowdfunding Campaigns in the United States. In C. Negrão & J. Brito (Eds.), Multidisciplinary Approaches to Crowdfunding Platforms (pp. 163-197). IGI Global. https://doi.org/10.4018/978-1-7998-3226-3.ch007

Chicago

Wright, William Frank, and Margaret MacFarlane Wright. "Characteristics of Successful Securities Crowdfunding Campaigns in the United States." In Multidisciplinary Approaches to Crowdfunding Platforms, edited by Carla Sofia Vicente Negrão and João António Furtado Brito, 163-197. Hershey, PA: IGI Global, 2021. https://doi.org/10.4018/978-1-7998-3226-3.ch007

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Abstract

Title III of the Jumpstart Our Business Startups Act (JOBS Act) enacted by the U.S. Congress enables a new crowdfunding source of investment capital for entrepreneurs and a new opportunity for all investors (Regulation CF). Given the information asymmetry, the SEC requires that managers provide information to investors (Form C). Using this information, this research tests whether business attributes, financial risks, and offering characteristics are associated with successful crowdfunding efforts for 277 offerings originating during 2016-2017 and closed as of May 2018. The following attributes are positively correlated with funding success: product idea; prior managerial experience with startups; financial risks reported by management; availability of an independent CPA review; and, especially for companies reporting revenue, accounting risk measurements. Finally, the funding intermediary chosen is important and some were more successful than others. Overall, the results provide new insights concerning characteristics of successful security-based crowdfunding offerings.