Equity crowdfunding research featured in Chicago Booth Review

Research by Xavier Walthoff-Borm, Armin Schwienbacher and Tom Vanacker on equity crowdfunding is featured in Chicago Booth Review.

Entrepreneurs are the rock stars of the business world. We read about them constantly in the press, many people wish they could be them, and we hear that people who invest in them make a lot of money. Until recently, only the richest among us were able to invest in entrepreneurs (technically, in their companies)—but not anymore. Enter equity crowdfunding, where anyone can go online to invest in early-stage companies in exchange for ownership shares.

Read the whole article in Chicago Booth Review

Business Administration Seminar with prof. Anita Quas “What money cannot buy”

Seminar/workshop with prof. Anita Quas (emlyon Business School, Lyon)

Title:  What money cannot buy: a new approach to measuring venture capital ability to add non-financial resources

Date: 20 December, 10h00 – 12h00
Venue: department of Accounting, Corporate Finance and Taxation, Sint-Pietersplein 7, 9000 Gent (room will be indicated)
Registration: https://webappsx.ugent.be/eventManager/events/anitaquas

Abstract (pdf)

Best paper award for Klaas Mulier

The European Commission rewards professor Mulier the Prize for best policy-relevant paper in financial research for his paper with Olivier De Jonghe and Thorsten Beck on ‘Bank Sectoral Concentration and (Systemic) Risk’.

A link to the paper can be found here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2959273

In the picture, prof. Mulier and De Jonghe receive their prize from Vladimir Sucha (Director-General Joint Research Center, EC) and John Berrigan (left) (Deputy Director-General, DG FISMA, EC).

Sustainability in equity crowdfunding

New paper by Silvio Vismara forthcoming in Technological Forecasting & Social Change.

Existing studies on the relationship between sustainability and crowdfunding are focused on campaigns that provide rewards for backers. Equity crowdfunding is substantially different in terms of motivations to invest as well as in size, horizon, and expectations of the investment. For the first time – using a sample of 345 initial equity offerings in United Kingdom platforms Crowdcube and Seedrs in the period 2014–2015 – this study provides evidence of the attractiveness of sustainability-oriented ventures in equity crowdfunding. Results show that, although sustainability orientation does not increase the chances of success or of engaging professional investors, it attracts a higher number of restricted investors. This evidence is interpreted considering institutional logic, whereas professionals follow a market logic, and restricted investors consider also a community logic.


Equity Crowdfunding, Shareholder Structures, and Firm Performance

New paper by Xavier Walthoff-Borm, Tom Vanacker & Veroniek Collewaert forthcoming in Corporate Governance: An International Review.

The paper provides a first-time glimpse into the post-campaign financial and innovative performance of equity-crowdfunded (ECF) and matched non-equity-crowdfunded (NECF) firms. We further investigate how direct and nominee shareholder structures in ECF firms are associated with firm performance. We find that ECF firms have 8.5 times higher failure rates than matched NECF firms. However, 3.4 times more ECF firms have patent applications than matched NECF firms. Within the group of ECF firms, we find that ECF firms financed through a nominee structure make smaller losses, while ECF firms financed through a direct shareholder structure have more new patent applications, including foreign patent applications.

Venture Capital Internationalization

In a new paper, David Devigne, Sophie Manigart, Tom Vanacker and Klaas Mulier review the extant literature on VC internationalization. We identify three major research streams within this literature, which revolve around the following questions: (1) which VC firms invest across borders and what countries do they target; (2) how do VC firms address liabilities of foreign investing; and (3) what are the real effects of international VC investments? We provide an overview of the contributions in these research streams, discuss the role of public policy, and suggest avenues for future research. 

More details, please visit: https://onlinelibrary.wiley.com/doi/epdf/10.1111/joes.12276

Local banking development and the use of debt financing by new firms

A new paper by Marc Deloof (University of Antwerp), Maurizio La Rocca (University of Calabria) and Tom Vanacker is forthcoming in Entrepreneurship Theory and Practice. In this paper, we investigate the effects of local banking development on the debt financing of new firms using a large sample of Italian firms. Controlling for potential endogeneity issues, we find that new firms are more likely to use bank debt and have higher leverage in provinces with more bank branches relative to population. However, it is important to account for bank heterogeneity. For instance, more foreign banks in a province actually reduce access to bank debt. Taken together, our study provides new and nuanced evidence on the role of local banking development for the debt financing of new firms. 

The Recent Financial Crisis, Start-up Financing, and Survival

A new paper by Marc Deloof (University of Antwerp) and Tom Vanacker is forthcoming in Journal of Business Finance and Accounting.  

Abstract: We investigate the effects of the recent financial crisis on start-up financing and survival using a data set that covers all Belgian new business registrations between 2006 and 2009. We find that bank debt is the single most important source of funding, even for start-ups founded during the crisis. However, start-ups founded in crisis years use less bank debt and have a higher likelihood to go bankrupt, even after controlling for their creditworthiness. These effects are stronger for start-ups that are more dependent on bank debt, such as start-ups founded in bank dependent industries and start-ups founded by entrepreneurs who are more likely financially constrained.

Equity Crowdfunding: First Resort or Last Resort?

A new paper by Xavier Walthoff-Borm, Armin Schwienbacher and Tom Vanacker is forthcoming in Journal of Business Venturing.

Abstract: Prior research has focused on the factors that affect funding success on equity crowdfunding platforms, but a detailed understanding of the factors that drive firms to search for equity crowdfunding in the first place is lacking. Drawing on the pecking order theory, we argue that firms list on equity crowdfunding platforms as a “last resort”—that is, when they lack internal funds and additional debt capacity. In line with the pecking order theory, the empirical evidence shows that firms listed on equity crowdfunding platforms are less profitable, more often have excessive debt levels, and have more intangible assets than matched firms not listed on these platforms. We discuss the implications for theory and practice.