Decoding the success of equity crowdfunding: investment decisions of professional and non-professional investors

Abstract

This paper investigates the investment decisions of professional and non-professional investors and the role of three classes of factors, i.e. Corporate Social Responsibility (CSR) orientation, human capital, and composition of ownership, in influencing the performance of equity crowdfunding campaigns, measured in terms of funding collected (in %), final investors involved and the funding amount raised (in €). The quantitative study is focused on the Italian equity crowdfunding market since Italy has been the first country in Europe to regulate this specific model and professional investors are required by law, thus allowing to compare the two classes of investors. Using a sample of 232 campaigns on the two leading Italian ECF platforms, empirical estimates based on regression analyses show that all the three classes of factors determine (or not) the campaigns’ success, and the overall performance is determined by non-professional investors’ orientation. Specifically, our results highlight that CSR orientation does not play a significant role in driving the success of equity crowdfunding campaigns, unlike the human capital and the compositions of ownership.