{"title":"The debt-equity choice in crowdfunding: a two-method approach","authors":"Mari-Liis Kukk","doi":"10.1080/13691066.2022.2128932","DOIUrl":null,"url":null,"abstract":"ABSTRACT Securities-based crowdfunding has evolved into an important source of financing for small and medium-sized enterprises (SME), but little is known about how crowdfunding campaigns fit into the capital structure decisions of SMEs. Combining insights from SME capital structure and crowdfunding literatures results in high ambiguity, as crowdfunding seems to change SME financing dynamics, but in an uncertain direction. We construct variables based on previous work on SME capital structure literature to empirically test which characteristics help explain the choice to seek either equity or debt funding among firms using crowdfunding. We use 713 equity and 403 debt campaign announcements registered with the U.S. Securities and Exchange Commission under Regulation Crowdfunding. Our empirical procedure includes both the traditionally used logistic regression method as well as a random forest classifier. We find that less-established firms with smaller funding needs are more likely to issue equity, whereas firms with strong growth momentum and larger funding needs prefer debt.","PeriodicalId":46643,"journal":{"name":"Venture Capital","volume":null,"pages":null},"PeriodicalIF":2.8000,"publicationDate":"2022-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"2","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Venture Capital","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.1080/13691066.2022.2128932","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 2
Abstract
ABSTRACT Securities-based crowdfunding has evolved into an important source of financing for small and medium-sized enterprises (SME), but little is known about how crowdfunding campaigns fit into the capital structure decisions of SMEs. Combining insights from SME capital structure and crowdfunding literatures results in high ambiguity, as crowdfunding seems to change SME financing dynamics, but in an uncertain direction. We construct variables based on previous work on SME capital structure literature to empirically test which characteristics help explain the choice to seek either equity or debt funding among firms using crowdfunding. We use 713 equity and 403 debt campaign announcements registered with the U.S. Securities and Exchange Commission under Regulation Crowdfunding. Our empirical procedure includes both the traditionally used logistic regression method as well as a random forest classifier. We find that less-established firms with smaller funding needs are more likely to issue equity, whereas firms with strong growth momentum and larger funding needs prefer debt.
期刊介绍:
Venture Capital publishes cutting edge research-based papers from academics and practitioners on all aspects of private equity finance such as: •institutional venture capital •informal venture capital •corporate venture capital •public sector venture capital •community venture capital It also covers all aspects of the venture capital process from investment decision to exit, including studies on: •investment patterns •investment decision-making •investment performance •realisation of investment value exit routes (including the relationship with junior capital markets such as NASDAQ, EASDAQ, AIM and Nouvelle March). •economic impact and public policy