LONDON SOUTH BANK UNIVERSITY

MASTER’S LEVEL RESEARCH-BASED BUSINESS PROJECT

Topic: Equity Crowdfunding: Determinants of Success

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Supervisor:

Submission Date:

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TABLE OF CONTENTS

TABLE OF CONTENTS................................................................................................................2
LIST OF FIGURE AND TABLES..................................................................................................3
EXECUTIVE SUMMARY.............................................................................................................4
CHAPTER 1. INTRODUCTION....................................................................................................5
1.1. Contextual Background and Research Problem...................................................................5
1.2. Research Aim and Research Questions................................................................................7
1.3. Research Objectives..............................................................................................................8
1.4. Thesis Structure....................................................................................................................8
CHAPTER 2. LITERATURE REVIEW.......................................................................................10
2.1. Review of Crowdfunding and Equity Crowdfunding.........................................................10
2.2. Determinants of Equity-Based Crowdfunding...................................................................11
2.2.1. Campaign Characteristics............................................................................................12
2.2.2. Networks......................................................................................................................14
2.2.3. Understandability.........................................................................................................16
CHAPTER 3. METHODOLOGY.................................................................................................18
3.1. Research Philosophy and Research Approach...................................................................18
3.2. Research Design and Research Method.............................................................................19
3.3. Data Collection and Data Analysis.....................................................................................20
3.4. Ethical Consideration..........................................................................................................21
CHAPTER 4. DATA PRESENTATION......................................................................................23
4.1. Secondary Data Analysis....................................................................................................23
4.1.1. An Overview of Global Crowdfunding Market...........................................................23
4.1.2. Analysis of Equity-Based Crowdfunding Characteristics...........................................26
4.2. Discussion...........................................................................................................................32
CHAPTER 5. CONCLUSION......................................................................................................33
5.1. Theoretical Implications.....................................................................................................33
5.2. Key Findings and Recommendations.................................................................................33
5.3. Limitations and Directions for Future Research.................................................................35
REFERENCES..............................................................................................................................37

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LIST OF FIGURE AND TABLES

EXECUTIVE SUMMARY

This dissertation in general presents an investigation into the role of equity crowdfunding in
determining the success for start-ups and entrepreneurs in today’s business. The use of
crowdfunding, as a special online form of crowdsourcing, was originally recognized as a
pathway to help raise fund for projects or ventures from a large number of people (crowd) and
donators. This has then become a popular tool for financing new ventures across different fields.
Nowadays, many small companies rely on equity-based crowdfunding as a major source of
financing in order to seek funding and capital for their business operations and associated
activities. This calling for investment in the early stage of the venture, as an exchange for stake
and ownership, opens up huge opportunities for start-ups and small-scale firms to quickly expand
their business ideas and scope. This current work deepens this phenomenal growth to understand
the importance of equity crowdfunding as a medium for small businesses and more importantly
to examine a number of determinant factors that drive the success of equity crowdfunding for
small firms. With this goal, this paper critically reviews the extant scholarly literature on
crowdfunding as well as theorizes and empirically analyzes several factors that are considered
the key for a successfully equity crowdfunding campaign. These success factors are campaign
characteristics, networks, and understandability. Overall, this research-based business project
report enhances our knowledge of the role of equity crowdfunding and provides useful, practical

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and relevant suggestions to both crowdfunding platforms and entrepreneurs for successfully
dealing with equity crowdfunding campaigns

CHAPTER 1. INTRODUCTION

The introduction of this report attempts to establish the panorama of this business research
project, which describes the background of the study and inspires the readers on the highlighted
research problem of equity crowdfunding for small companies. This rationale for conducting this
current research allows formulating the major research questions as well as more specific
research objectives that are to be accomplished at the end of this individual project report. The
final part of this introductory chapter unit gives a brief outline to help the readers easily follow
up the rest of this business report.

1.1. Contextual Background and Research Problem

Crowdfunding is literally composed of “crowd” and “funding”, which should therefore be

understood as an Internet-based form of raising fund and monetary resources from a large base
of investors (crowd), primary via online platforms or social media sites (Block, Hornuf, and
Moritz, 2017). This channel has rapidly emerged and been increasingly adopted by young
enterprises to become one of the most used (online) alternative for collecting early-stage funding
as this encourages start-ups to shift from the traditional venture capital (VC) through personal
loans from friends, family members or bank and private equity services to virtual environment

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for raising their funds (Block, Hornuf, and Moritz, 2017). This new option is referred to as equity
crowdfunding, calling for investments and supplies of direct funds from public investors in
exchange for a proportionate part of equity/shares and ownership of the new business venture
(Vulkan, Åstebro, and Sierra, 2016).

Initially, crowdfunding was only used as a tool for funding small-scaled business and increase
the capital investment but gradually it has been a widely used mechanism by even large-scale
businesses as well. Equity crowdfunding is not only a tool for funding but also come up as an
element for reducing the funding barriers and drawbacks in primary stages of carrying out the
business activities (Block, Hornuf, and Moritz, 2017). In the early stages of business (e.g. start-
ups), funding is generally done by the owners/founders or by family members and friends and
although there are also certain instances in which company can approach an angel investor to
seek the investment and gain the success, these cases are very rare (Vismara, 2016). Equity
crowdfunding has then been considered to be the best practical alternative to overcome these
funding barriers, which helps small enterprises to fulfill the gaps in financing the business in the
early phase. In fact, the equity crowdfunding has grown rapidly, thereby the global crowdfunding
market was estimated to be valued at over $10 billion in 2018 and is predicted to reach nearly
$30 million by 2025 (Picardo, 2020). Despite some own risks such as fraud, equity
crowdfunding can be deemed as the most emerging and available way for small businesses to
seek the financial investment in online environment. Figure 1 illustrates the worldwide growth
of funds raised by crowdfunding method from 2014 to 2016, showing a rising tendency toward
this form of financing.

Figure 1. Global crowdfunding funding between 2014 and 2016 (in $US millions)

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 Source: Statista (2020a)

Although many platforms for equity crowdfunding have been developed over the past decade,
replacing and threatening the traditional forms of venture capital (VC) and business angel to
finance start-up companies (e.g. TV show Shark Tank), this Internet-oriented financing has not
been paid enough and sufficient attention by scholars (Vulkan, Åstebro, and Sierra, 2016). In
other words, the extant scholarly literature provides relatively poor knowledge of this financing
phenomenon. More specifically, it remains unclear and largely unaddressed by the current
research regarding the importance of equity crowdfunding in financing start-ups and small-scale
enterprises as the existing body of literature provides a mixed and inconsistent picture on this
particular social and financing phenomenon and more importantly fails to give a thorough
understanding of significant determinants behind a successful equity crowdfunding campaign
(i.e. drivers of investment decision for equity crowdfunding, Lukkarinen et al., 2016). In this
regard, Lukkarinen et al. (2016) state that criteria for successful venture capital (VC) and
business angel, as two financing fields similar to equity crowdfunding, are not primary
conditions for successful crowdfunding, some public network and online characteristics
represent more importance to succeed in this emerging field of equity crowdfunding.

In response, this research paper attempts to address the above research paucity from an empirical
perspective. It first drafts the theoretical literature on crowdfunding, and although there are

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several types of crowdfunding (e.g. reward, donation, lending, Vulkan, Åstebro, and Sierra,
2016), this paper particularly fouses on reviewing only equity-based crowdfunding. On the other
side, since equity-based crowdfunding basically refers to the process wherein the start-ups and
businesses at the initial stage are being funded by the public crowd or investors and in return,
they get the shares and ownership of the new venture, shareholders cum investors expect to
receive company’s profit in the future if their investment succeeds in the marketplace. This
interdependence between investors and owners/founders then indicates several conditions that
must be guaranteed for a successful equity-based crowdfunding campaign. The empirical data
from both secondary source and primary source (i.e. interviewing) in this study then enable
deepening the knowledge of critical factors that determine a successful equity-based crowd
funding (Moritz and Block, 2016).

1.2. Research Aim and Research Questions

In response to the phenomenal growth of equity crowdfunding, the main aim of this research
paper is to understand the impact of equity crowdfunding on driving business success for start-
ups and small-scale enterprises, this aim’s scope also covers the investigation into factors behind
the successful equity-based crowdfunding campaigns. In particular, this overall research is
broken down into the two following primary research questions which should be answered and
solved thoroughly after completing this business project:

RQ1: Is equity crowdfunding the best alternative to financing start-ups and small-scale ventures?

RQ2: What are the determinant factors for such successful equity crowdfunding campaigns?

1.3. Research Objectives

While research questions give the direction for the research procedure and subsequent steps,
research objectives clearly state what are to be achieved in the end. In line with those two
research questions above, this research report is particularly focused on addressing the below
specific research objectives:

To review the extant literature on equity-based crowdfunding as well as gain a comprehensive

knowledge of fundamental determinants of equity crowdfunding.

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To examine the role of equity crowdfunding in promoting business success for start-ups and
small-scale companies.

To identify potential factors that determine the successful equity-based crowdfunding

campaigns.

To provide recommendations to small-scale enterprises with regarding to successfully running

equity crowdfunding campaigns.

1.4. Thesis Structure

After having established an overall sense and goal of this business research project, the
remainder of this is organized into the four consecutive chapter units that are all linked to this
first chapter. Chapter 2 shall cover the extant literature related to crowdfunding in order to build
the theoretical grounding for this research work. In addition to this careful review of equity
crowdfunding, another focus of this second chapter will be placed on critically reviewing
different determinant drivers behind a successful equity crowdfunding. Next, Chapter 3 will
address the methodology for proceeding this research, in alignment with descriptive research
design, the emphasis will be on justifying the right research philosophy and research approach as
well as the research method strategy. The acquisition of secondary data and the data analysis
approach will then be carefully explained prior to discussing the ethical facet of this research
project. Subsequently, Chapter 4 shall concentrate on summarizing and presenting the empirical
data being collected, which helps to support as well as empirically test those theorized
determinant success factors of equity crowdfunding. Empirical results will then be compared
with those from past scholars for discussion. Finally, Chapter 5 will wrap this business report up,
summarizing the key findings and highlighting the implications for both theory and practice. The
end of this report will acknowledge a number of key limitations together with directions for
further improvements.

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CHAPTER 2. LITERATURE REVIEW

This second chapter mainly aims to cover the literature related to this research topic. It first
reviews the conceptualization and evolution of equity crowdfunding from the financial point of
view, this helps the general readers to shape the background knowledge of this concept. Based
on this, the ensuing part critically discusses and theorizes different theoretical drivers that might
determine the success for crowdfunding from the existing body of literature. Overall, this chapter
builds the theoretical underpinnings for this research prior to moving to the next chapters.

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2.1. Review of Crowdfunding and Equity Crowdfunding

Financers, policy makers, investors and practitioners have recently been interested in
crowdfunding as the latest trend in the financial market that helps to deal with traditional
entrepreneurial barriers and market failure (Cumming, Meoli, and Vismara, 2018).
Crowdfunding is made-up by “crowd” and “funding”, which literally means financial activities
related to raising fund from the crowd and being normally taken place in online environment
(Block, Hornuf, and Moritz, 2017). In pace with the global Internet popularity, this new form of
funding has increasingly been adopted as one of the most emerging alternatives to raising fund
for start-up businesses in the early-stage, steering away from the traditional venture capital (VC)
(Block, Hornuf, and Moritz, 2017). There are the three different models of crowdfunding: reward
model, lending based model, and equity-based model (Robiady, Windasari, and Nita, 2020). For
the reward system, the campaigners offer the reward such as project membership or profit share
with the funders based on their contribution (Robiady, Windasari, and Nita, 2020). In lending
based model, which is the least popular among the three, refers to crowdfunding platforms that
serve as credit provider to entrepreneurs and offer fixed return, this kind of system can also be
known as peer-to-peer (P2P) business model (Robiady, Windasari, and Nita, 2020). In equity-
based model, which is the core of this thesis paper, funders shall be given a portion of ownership
(Robiady, Windasari, and Nita, 2020). In particular, this equity crowdfunding calls for
investments from public investors in exchange for a fraction of equity sharing and ownership of
the new business venture (Vulkan, Åstebro, and Sierra, 2016).

In the early business stages, funding is generally made by the owners/founders or by family
members, as the traditional venture capital (TVC) or by angel investors (Vismara, 2016). The
emerge of equity crowdfunding offers an alternative to overcome such conventional ways of
financing the business, which helps small enterprises to fulfill the gaps in financing the business
in the primary phase. Equity-based crowd funding gives people and crowd a chance of acting as
investors to own share and gain profit from their investment. Vulkan, Åstebro and Sierra (2016)
emphasize that equity-based crowdfunding is a font for increased liquidity and flexibility and
advanced consumption of goods and products. Moreover, Cumming, Meoli and Vismara (2018)
have pinpointed that equity-based crowd funding is not only a sponsoring and funding method
for the companies but also a tool for the public customers to have better access to company profit

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and business. Despite some risks such as fraud, equity crowdfunding, which is largely driven by
personal beliefs of investors, can be deemed as the most emerging and available way for small
businesses to seek the financial investment in virtual setting.

2.2. Determinants of Equity-Based Crowdfunding

The extant bulk of scholarly literature on crowdfunding has documented a number of factors that
gain their importance in relation to the success of crowdfunding campaign. Belleflamme,
Lambert and Schwienbacher (2013a) have conducted interview with experienced crowdfunding
entrepreneurs and businessmen and then drawn the conclusion that expectation of return or profit
sharing is the most important motivation for investing in equity crowdfunding to finance a
business. Meanwhile, Cumming, Meoli and Vismara (2018) propose the two models for building
a successful equity-based crowdfunding: “all or nothing” (AON) model and “keep it all” (KIA)
model. Broadly, prior papers have highlighted that, in general, research on the determinant
factors contributing to the success of crowdfunding for financing the business provides mixed
and inconsistent results (for review, see Moritz and Block, 2016; Vismara, 2016).

Prior to addressing important factors for crowdfunding campaign, it would be of relevance to

first review critical criteria for funding through venture capital (VC) and business angel as two
traditional forms that contradict the crowdfunding method. Venture capitalists often consider
both professional experience of the entrepreneurs and uniqueness of the new product/business
ideas in the marketplace as well as market potential as three essential decisive factors
(Lukkarinen et al., 2016). This professionalism refers to entrepreneurs’ experience in the
financial market while the unique attributes of the product may be related to its competitiveness,
innovativeness, and current stage in the product life cycle and market-driven factors refer to
growth potential and market size (Streletzki and Schulte, 2013). In general, the key decision
criteria for business angels are alike to those of venture capital (VC). Thereby, angel investors
are particularly interested in the role of entrepreneur, market and product but angels might focus
more on the significance of entrepreneurs while VC emphasizes the product and market more
(Ding, Sun, and Au, 2014). Besides that, trust in entrepreneur is the primary condition for angels
to consider an investment, it is followed by business plan, and potential revenue growth. Overall,
literature in both VC and angel investor seems to agree that personal characteristics of the

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entrepreneurs and management team (i.e. human capital) are still the most significant decisive
criteria for making financial investment. This study slightly steers away from these traditional
successful criteria in order to focus on three relatively distinct pillars driving the successful
equity-based crowdfunding: campaign characteristics, networks, and understandability, which
follows the previous systematic work of Lukkarinen et al. (2016).

2.2.1. Campaign Characteristics

A sizeable bulk of previous research on crowdfunding has largely documented that

characteristics of the campaign are the most important decisive criteria that funders take into
account before making decision, thus campaign characteristics have a big impact on the
crowdfunding success (Lukkarinen et al., 2016). In this paper, funding target, campaign duration,
geography, and social cause associated with sustainability are underlying campaign
characteristics to be covered.

Each crowdfunding campaign usually sets a target range for the expected funding amount, which
can be categorized into the two underlying models: keep-it-all (i.e. entrepreneurs retain any
collected money to operate the business); and all-or-nothing (i.e. entrepreneurs form a goal for
the minimal funding target before the campaign and only take the invested money once the target
goal is reached (Piva and Rossi-Lamastra, 2017). For all-or-nothing system, entrepreneurs must
be careful to set a suitable minimal cut-off because if the accumulated fund in the end falls below
this line, the campaign will fail. As such, to implement this model, start-ups have to consider
both sufficient funds and minimum threshold (Lukkarinen et al., 2016). In connection with this,
Ahlers et al. (2015) unveil a statistical positive link between minimum investment requirement
and sum of gathered funding. This means that when the target threshold is smaller, it is easy to
raise fund from the crowd.

Prior to running a crowdfunding campaign, the duration for this campaign is usually scheduled
ahead. Mollick (2014) hold the idea that longer span for campaign shapes an adverse impact on
the likelihood of campaign success because a long period signals entrepreneurs’ lack of
confidence in the light that they are afraid their new product offerings or business ideas are not
good enough to quickly raise enough fund within a short period of time. It has also been
concluded by Mollick (2014) that equity-based crowdfunding diminishes when there is an

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increase in the duration of business projects. Lukkarinen et al. (2016) add that longer period for
running a crowdfunding campaign is unnecessary as the amount of funds only surges in the
beginning and in the end of the campaign whereas the middle stage normally witnesses a quiet
period. Hence, the smaller the project in the time period, the greater the chances of successful
equity-based crowd funding. As the same time, as funding a new business is a financial
investment that involves risks, giving too much time to investors to consider the investment
carefully might backfire as this turns risk-seeking investors to risk-averse persons (Lukkarinen et
al., 2016).

Geographical factors and proximities have already been analyzed by various research scholars
and it has been stressed that the lesser the distance between the capital providers and business
owners, the higher the successful chances of equity-based crowd funding (Burtch, Ghose, and
Wattal, 2012). This is related to the concept of psychic distance in international business,
because crowdfunding activities occur in virtual environment, there are no geographical barriers
and it means that such crowdfunding activities can be taken place in cross-border context. As
such, there could exist cultural, political, social and legal dissimilarities between entrepreneurs’
base and funders’ base and psychic distance basically embraces these differences (Burtch,
Ghose, and Wattal, 2012). With geographical closeness, this psychic distance is considerably
mitigated and this helps to remove the disparities between investors and entrepreneurs to
enhance trust and build warm relations for higher chance of funding. Meanwhile, Ralcheva and
Roosenboom (2016) emphasize the technological advancement and innovation of the market
where the campaign is based, the authors elaborate that the US and Germany have booming
equity-based crowdfunding sector due to the advanced level of technologies and innovations that
remarkably supplement the project to be operated in these markets. Moreover, legal environment
of the geographical location is of importance. For instance, in the US, the Jumpstart Our
Business Startups Act (JOBS Act) which was enforced in 2012 becomes an essential legal
framework that eliminates many securities regulations in order to promote the funding for small
ventures (Ralcheva and Roosenboom, 2016).

Another vital motivation to engage in crowdfunding is attributed to social cause. It is imperative

to note that those enterprises which are working for social cause and defined as non-profit
organizations also seek crowdfunding in order to maintain and operate their social activities. It

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has been noted by Cai, Polzin and Stam (2019) that equity-based crowdfunding and social cause-
related businesses can be in harmony with each other. In other words, there is no conflict
between non-profit purpose and aim for calling fund from public via online platforms. One way
for promoting the focus on social cause of the campaign is to concentrate on the sustainable
nature of the product offerings for the funding process. Indeed, the promotion of sustainability by
the firms is one core idea that has attracted investors and led to the success of equity-based
crowdfunding (Angerer et al. 2017). As already known, sustainability is known for collective
good which deserves to be in the list of core values being promoted by the companies. Hence
financiers are more attracted by the idea of sustainability which has led to the development of the
crowdfunding process. In reality, sustainability-oriented ventures in equity crowdfunding has
been reported to improve the number of engaged professional investors and subsequently
enhance the chances of success (Vismara, 2019.

2.2.2. Networks

The notion that network plays a critical role in crowdfunding has been agreed by a growing
number of scholars (Helsinki, 2014). This means that funders and investors can be the ones that
are from the personal networks and connections of the primary entrepreneurs. Lukkarinen et al.
(2016) classify networks for equity crowdfunding into two main types: private networks, and
social networks. It is a norm that a considerable contribution to the fund is from the private
networks such as friends or family members. This source of financing plays a critical role in the
early days of the new business venture. In fact, previous research has pointed to the fact that
capital providers such as family members and friends are contributive factors in the initial phases
of the crowdfunding project (Lin and Viswanathan, 2016). This point is expanded by
Kuppuswamy and Bayus (2013) who reinforce the influence on the campaign success from
friends and family who play an important role in the subsidy processes, especially at the initial
and final phases of funding as this is the time when the owner lacks funding and the probability
of the contribution by family and friends increases.

On the other side, in the digitally mediated era, relationships shift toward social media
environment and social media networks thus increasingly contribute to the campaign success.
Prior research has highlighted that the level of being active and interactive on social media, such

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as number of posts or social media page size measured by the number of followers/subscribers,
would be a strong predictor of campaign success because such signals of interactions help to
enhance the “tie strength” which is defined as the reciprocal relationship between the focal
broadcasting point (i.e. entrepreneur) and other social actors/users (Zheng et al., 2014). In fact,
interacting socially through various social networks has been seen as a success factor for the
development of equity-based crowdfunding as capital providers also seek to grow their
interaction through social networks. There have been various quantitative studies being
conducted to see how social interactions motivate capital providers to invest and develop equity-
based crowfunding. It has been argued by several researchers that equity-based crowdfunding
grows immensely as it offers a platform for social interactions and thus social interaction is one
of the determinant success factors which is accountable to the growth of equity-based crowd
funding (Lukkarinen, et. al., 2016). The reason for this is that social networking helps to decrease
information irregularities, there is an increase in the probability of funding (Lin and
Viswanathan, 2016). These social media channels become the network connecting entrepreneurs
and other potential online funders and more importantly the low-cost marketing and public
relations (PR) tool for showcasing and promoting the new crowdfunding campaign. In other
words, if entrepreneurs are social influencers, they are more likely to succeed in their campaign
(Lukkarinen et al., 2016). As such, aside from personal characteristics, the public influence
would be a vital contributing factor.

The timing of investment in online environment is also an important factor that has emerged to
be relevant to the progress and advancement of equity-based crowdfunding. The funding of the
large public is increased when the online public is convinced through signals that the right time
for funding is prevailing. The behavior of the peers in social media environment is the signals on
which the decision of the capital providers depends and thus it is those kinds of online behaviors
that are the determining factor for the growth of equity-based crowdfunding via social media
(Lukkarinen et al., 2016). It has been opined by Qiu (2013) that the comments, posts and other
relevant signals from the social networking peers along with media coverage give an affirmative
and positive effect on equity-based crowdfunding transactions. Also, in the view of Moritz
(2014), the endorsement by the peers is regarded as a signal from the peer which affects the
transactions of crowdfunding positively. Thus, signals from the peers within social media
environment have also emerged as an important determinant success factor for the growth and
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development of equity-based crowdfunding (Wallmeroth, Wirtz, and Groh, 2018). On the other
side, Ahlers et. al. (2015) have conducted research to see which signals are relevant and should
be considered while proceeding with the decision of crowdfunding. The authors for this purpose
have analyzed the data collected from an Australian crowdfunding platform which is equity-
based. It has then been concluded by this research that the board members who are well educated
and experienced and are of high levels and strong networks are more likely to send positive
signals through social networking channels and thus are more likely to get funded by means of
equity-based crowdfunding.

2.2.3. Understandability

Some prior studies have noted that the role of understandability should not be underestimated
when proposing a crowdfunding campaign. Belleflamme, Lambert and Schwienbacher (2013b)
in this regard state that the extent to which the concept of new product offering and new business
idea can be understood would play an important role in the campaign success because this is
relevant to whether the investors can easily understand the new ideas or offerings from the
entrepreneurs. Lukkarinen et al. (2016) point to the fact that product offerings have higher
chance of being successfully crowdfunded as compared to service offerings, which is because
investors can easily understand the tangible features of the physical product while they might
encounter difficulties to understand the ideas behind a service offering that is greatly intangible
by nature. With strong tangible sense, funders can shape a clear perception of the certainty or
reduce the perception of uncertainty, which is an important factor for investing in new businesses
that often incur high degree of risk (Ellman and Hurkens, 2019).

One way to enhance the understandability of the crowdfunding campaign is to focus on setting
clear goal. In fact, it has been researched by the scholars that the setting of particular goals is also
concluded to be a factor for the evolution and progress of equity-based crowdfunding. This is
called the goal-setting theory. A goal is defined as an aim or target which is to be achieved by the
company, for example, to complete a particular project in a specific span of time. Thus, in the
context of crowdfunding, it has been argued that clear goals set for a project being funded by
crowdfunding lead to strong motivation for the investment in that project and thus give rise to
strong equity-based crowdfunding (Zhou et al., 2016). It is also said that that the people funding

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in the business by means of crowdfunding under the goal theory are likely to fund a larger
amount of funds for the businesses (Kaartemo, 2017). Setting goals is actually a crucial personal
characteristic of entrepreneurs, which reflects their human capital that signals the potential of the
success in equity crowdfunding (Piva and Rossi-Lamastra, 2017).

Another method for improving the understandability is the provision of financials. In particular,
the provision of related financial information such as historic financial statements or projection
of future revenue and earnings are important indexes that investors might consider. Mollick
(2014) in relation to this contend that when entrepreneurs offer no financials, investors are
confused and reduce the trust toward the entrepreneurs, which then makes the campaign less
attractive. Similarly, Ahlers et al. (2015) have pointed to the fact that such campaigns that do not
supply the reliable financial forecast and prediction tend to acquire substantially less funding
amount as compared to those that offer more relevant financial information. This supply of
financial information is consistent with the aspect of professionalism of the crowdfunding. In
fact, another determinant success factor for equity-based crowd funding is its professionalism
such as video presentation of the project that works as a proxy for professionalism. Further, in
view of Pitschner and Pitschner-Finn (2014), the frequent updates and progress of the project
being provided by the companies to the capital providers provide up-to-date information about
the campaign and is also deemed as a tool for attracting more funds from the providers as the
progress of the company shall influence the capital providers in a positive way to proceed with
more funding. Block, Hornuf and Moritz (2017) empirically uncover that the number of funds
made by the crowd is driven by the updates on the campaign. Furthermore, since most of funders
are not financial experts (i.e. public investors), the use of easily understood language would be
helpful to increase the crowd participation. Also, the updates should cover information relevant
to the business model, entrepreneurship team, product development and marketing initiatives
(Block, Hornuf and Moritz, 2017).

CHAPTER 3. METHODOLOGY

This third chapter provides an explanation for the methodology being adopted for undertaking
this research. Research methodology is the framework that will help the researchers to carry out
the investigation process in a proper manner in order to reach the set aim and objectives. This

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methodology must be connected with the initial research goal consistently. As such, this chapter
hopes to give an understanding of appropriate approach and method that are necessary to gather
reliable and relevant data related to this research topic. First of all, the interpretive philosophy of
science and inductive approach are carefully justified, providing the grounding for choosing
descriptive design to conduct this current research. Consistent with this, both qualitative and
quantitative methods are described in detail in the data collection part. Eventually, some ethical
considerations are mentioned and discussed in the end of this chapter unit.

3.1. Research Philosophy and Research Approach

Scientific philosophy or paradigm is often fallen into one of two kinds, namely positivism and
interpretivism. The initial important step toward building the methodology for this research is
choosing the right paradigm that is the best suited to the purpose and nature of this research
study, which helps the research to be undertaken effectively. Positivism philosophy is the
paradigm in which the data and information must be factual in nature, which complies with the
basis of the fact that the reality is unchanging and could only be explained and analyzed from an
objective perspective (Hughes and Sharrock, 2016). Positivists claim that the theories should be
isolated (i.e. not depending on the context of the study) and there should be the same observation
across people or at different time points. This means that the reality is tested by changing only
condition to observe the repeated patterns across people or times (Hughes and Sharrock, 2016).

While positivism is undoubtedly suitable for natural sciences field, it has always been a
controversial matter to consider whether positivism philosophy is appropriate for social sciences
field or not. One limitation of positivist paradigm is that if the parameters related to the research
problem seem immeasurable, using positivism fails to gain scientific outcomes (Hughes and
Sharrock, 2016). In relation to the present study, as this study addresses the topic of equity-based
crowdfunding, it is hard to completely measure this social phenomenon with only numeric facts,
instead, some observations and interpretations are needed to understand this business practice.
This suggests that positivism appears inappropriate for the purpose of this current study.

On the other hand, interpretive philosophy is the paradigm that concerns the contextual
perspective of the study. Rather than purely relying on factual information and mathematics to
solve the research problem, interpretivism emphasizes the role of human, namely researchers, in

18
giving the meaning and interpreting the research problem being studied (Hughes and Sharrock,
2016). This description implies that interpretive philosophy is suited to the purpose of this
research study given the nature of the selected topic. In fact, interpretive philosophy is helpful in
this regard as it deals with studying the focal research phenomenon with taking contextual
factors into account (Hughes and Sharrock, 2016).

Another major consideration refers to the theoretic-reasoning approach, between deduction and
induction. Deduction emphasizes the top-down approach wherein data must follow theory, which
means that hypotheses will be developed from the existing theories and then tested by obtaining
the empirical data (Babbie, 2012). As the review of extant literature as seen in Chapter 2 does
not concentrate on hypotheses developing, suggesting that deductive approach might not be right
here. On the contrary, inductive approach follows the bottom-up approach in which theory
follows data, which is to deepen and extend the knowledge of the current literature (e.g.
theoretically driven approach) (Babbie, 2012). This induction is suitable for the purpose of this
research that wishes to deepen and expand our current knowledge of crowdfunding and its
related theories.

3.2. Research Design and Research Method

Management research can be performed in different ways and it is very important for the
research investigators to understand and know the type of research design that is best suited to
the essence of the research. In relation to this, there are the three different ways to design the
empirical research: exploratory design, experimental or causal design, and descriptive design
(Creswell and Poth, 2016). Exploratory design is congruent with exploring the research problem
very broadly using non-numerical data (Creswell and Poth, 2016). While this study certainly
needs numerical facts (e.g. numbers, figures) to understand equity-based crowdfunding, the
focus on only non-numerical information of exploratory design fails to help gain such data.
Experimental design is consistent with causality that is aimed at examining and proving the
causal relationship between cause factor and effect factor (Creswell and Poth, 2016). As this
study is focused on understanding successful factors behind equity crowdfunding broadly, it does
not wish to deal with understanding the causal effect of only one specific factor on crowdfunding
success. In line with interpretive philosophy, it seems that this current research is best suited to

19
descriptive design, which is to gain descriptive insights into the phenomenon of equity
crowdfunding. In other words, descriptive design enables describing this business phenomenal
growth as well as its successful antecedents. As such, exploratory design is regarded as the
appropriate choice for this current study.

When it comes to the research method, quantitative and qualitative methods are primarily
considered. It is critically important for the investigators to first identify the nature of the study
and then the right method to be employed (Beins, 2017). Qualitative method emphasizes the
research process that is totally based on subjective perceptions and interpretations. This is a non-
numerical research technique mainly consistent with theoretical frameworks (Beins, 2017). It
deals with observations, case studies to give the meanings to the phenomenon being observed
and works for developing an in-depth understanding of the theories (Beins, 2017). Some of the
popular qualitative methodologies are phenomenology, ground theory, ethnography, or case
study. in contrast, quantitative method is the technique where the process of research is based
highly on the numerical and statistical facts (Beins, 2017). The actual figures and data provides
an objective view on the research topic. Quantitative method attempts to assess how the
phenomenon changes when changes are made to one/some variables associated with the
phenomenon, this way allows the researchers to understand the relationship and interdependence
among the variables related to the phenomenon (Beins, 2017). Some of the popularly used
methods for quantitative analysis are survey, experiment, or correlation. Given the fact that
quantitative method must be well-organized prepared as compared with qualitative method,
conducting quantitative analysis includes the development of pre-determined questions to direct
the research, identification of research tools, and establishment of procedures (Beins, 2017).
Overall, since this current study needs both numerical and non-numerical data in accordance
with descriptive focus as justified previously, both qualitative and quantitative methods are
incorporated into collecting and analyzing the secondary data (Pangrazio, 2017). That said, the
use of quantitative data, such as figures, statistics, and numbers, will be more in the data
analysis.

3.3. Data Collection and Data Analysis

20
Data collection is the most essential step in this research because it provides the sources to
accomplish the research goal. The information-gathering process is basically get done through
two ways: primary data research, and secondary data research. The data that are collected
through the direct sources by directly approaching the participants to get the needed information
are basically understood as primary data (Babbie, 2012). This primary source of data is often
achieved through interviews, surveys, observations, or questionnaires (Moser and Korstjens,
2018). Meanwhile, secondary data are retrieved from already available sources such as books,
journal articles, web sites, annual reports, magazines, market reports and the like (Moser and
Korstjens, 2018). In other words, when the data are referred from various already existing
sources, it is said to be secondary data. Effort, time and cost are less for this kind of already
available data as the researchers only need to seek the correct information that will support and
justify their research topic, without conducting primary research. As a secondary research-based
project, this current study only deals with secondary data, which are based on the public and
online sources related to crowdfunding such as market reports, journal articles to realize the
research goal (Powney and Watts, 2018).

The data analysis assists the investigators to interpret all the raw facts and data into meaningful
information. In other words, data analysis process helps to produce factual outcomes that will
benefit the research to meet its goals and objectives. In alignment with taking a mixed method
that combines qualitative method with quantitative method, this study will analyze both
qualitative data and quantitative data as explained earlier. The quantitative data analysis deals
with raw numerical data such as figures, statistics, numbers, while the qualitative data analysis
copes with non-numerical data such as texts and textually driven information (Silverman, 2016).
This combination allows understanding the topic of equity crowdfunding from a holistic
perspective.

3.4. Ethical Consideration

It is very important for the researchers to make sure that the research that is getting processed
must be ethical. In fact, there are many vital things that are needed to be focused by the
investigators to meet the standards of the research ethics. Therefore, this particular research pays
attention to all ethical factors to make sure there is nothing wrong with regard to the ethics

21
during the process of conducting this research. First, this research has been conducted totally
fairly to reserve all the rights of relevant people. For example, people who are reported in
secondary data sources have been referred to this study fairly and equally, without considering
their background like race, religion or age. More importantly, the research data have been stored
safely, without any losses or manipulations. Privacy and personal information related to people
in this report is well secured and not leaked publicly. Also, the use of secondary data is
consistent with the original sources, there is no falsification or fabrication in order to ensure the
integrity manner of this research study (Babbie, 2012).

22
CHAPTER 4. DATA PRESENTATION

This chapter presents the data being collected in accordance with what have been explained and
described in the prior chapter. As a secondary-based research, the main focus along this chapter
summarizes, discusses, and critically analyzes the findings from several reliable and high-quality
public sources as well as market reports related to equity crowdfunding. The new findings in this
chapter are then to be discussed relative to the existing body of literature for comparison.

4.1. Secondary Data Analysis

4.1.1. An Overview of Global Crowdfunding Market

In line with the introduction in the beginning of this paper, the global crowdfunding market has
witnessed an impressive expansion over the past few years and is projected to continue seeing a
rapid growth over the next decade. Figure 2 compares the worldwide crowdfunding market size
between 2018 and 2015, it can be inferred that 2025 size almost triples that of 2018 and this
highlights the huge potential of this relatively new financial phenomenon.

Figure 2. Global crowdfunding market size between 2018 and 2025

23
 Source: Statista (2020b)

As mentioned in the literature, geography would represent an important characteristic of the

crowdfunding campaign. According to Figure 3, North American market, including the US and
Canada, has the largest regional crowdfunding market size, which almost doubles that of Asia
and Europe while crowdfunding activities seem inactive and unpopular in other parts of the
world, such as South American or Africa. However, when looking at the growth rate, it is clearly
shown that Asian region saw the highest expansion rate during this period. This is consistent
with the information being shown in Table 1, which lists top 30 global countries with high
crowdfunding volume and China is ranked number 1 in this list while the US holds the second
position. Other Asian promising marketplaces for crowdfunding include Indonesia, Japan, South
Korea, Israel, India and Singapore. A panorama is that Asia would become the huge of the global
crowdfunding market over the next decade due to the huge population and rapid and emerging
economic development in this region. In fact, entrepreneurship and start-ups have been
reportedly seeing an upsurge in many parts of Asia, especially in Indonesia and India. Since
Asia-Pacific region is predicted to lead the future of world as the global economic hub in the
next decade, many governments have attempted to solidify their position on the global map by
providing many incentives to support the local ecosystem of small businesses, and this becomes
the fundamental driver to change the landscape of entrepreneurship in these countries (Kantelia,

24
2019). As such, the demand for financing businesses and raising funds in these countries would
be extremely high, driving the booming of crowdfunding activities.

Figure 3. Crowdfunds by regions and growth rate 2013-2014

Source: Rainey et al. (2017)

Table 1. Top 30 countries for crowdfunding by volume in 2018

25
 Source: P2PMarketData (2020)

Figure 4 lists several portals which are popular to start-up and entrepreneurs when they want to
engage in crowdfunding to finance their business in the early stages. Three biggest platforms
(WeFunder, StartEngine, and Republic) which account for over three-fourths of the global
capital raised via crowdfunding in 2019 are all from the US. This again reflects the fact that
although China is the world’s largest crowdfunding market, the US still remains its technological
competitiveness in this game.

Figure 4. Leading equity crowdfunding portals in 2019

26
 Source: Crowdwise (2020)

4.1.2. Analysis of Equity-Based Crowdfunding Characteristics

Because there are different forms for crowdfunding as reviewed previously, this section only
focuses on analyzing equity-based crowdfunding as the main focus in this report. Figure 5 shows
that as compared with debt or lending based model, equity-based model appears less popular in
2018. In particular, the crowdfunding amount through debt-based model is fifteen times as large
as that via equity-based model. This is commensurate with the information being illustrated in
Figure 6 showing that growth rate of equity-based model still lags behind that of lending-based
model during 2013-2014 span. Similar pattern can also be seen in Figure 7 regarding
crowdfunding share based on business models. These sorts of information can be viewed from a
different angle: as compared to lending-based model that is currently widely popular and could
therefore be soon saturated within crowdfunding platforms, equity based model is less
competitive and can be expected to be more promising in the future because its potentials are still
not fully explored by current enterprises and businesses.

Figure 5. Crowdfunding share by categories in 2018 (after excluding China)

27
 Source: P2PMarketData (2020)

Figure 6. Crowdfunding growth rate by categories

Source: Rainey et al. (2017)

Figure 7. Crowdfunding share by business models in 2018

Source: P2PMarketData (2020)

28
In a recent survey targeting investors who have invested in equity crowdfunding, the results
show that investors tend to diversify their investment portfolio by investing in different
properties in exchange for their ownership of a new business. Figure 8 depicts some common
properties, thereby hedge fund is the more preferred type (40%) and it is followed by investment
in real estate (21%) and private equity (18%), respectively. Meanwhile, private credit (9%) and
real asset (3%) are less popular options for investors. When considering the type of
industry/business that investors are interested the most in making equity investment, Figure 9
highlights that entrepreneurship (i.e. small new business venture) is commonly rated by
investors, it is followed by social causes and firm & performing arts, in that order. Meanwhile,
real estate seems not so appealing to investors in equity crowdfunding and music & recording
arts are also unattractive. Recalling that crowdfunding activities originated in arts, whereby
artists go online to seek funds for their art projects. However, when looking at Figure 9, this has
changed when considering crowdfunding as a formal financial investment as music and other
forms of art are not really interested by investors to make equity-based funding investment.

Figure 8. Property types for equity crowdfunding investment

Source: FundWisdom (2019)

29
 Figure 9. Equity crowdfunding according categories

Source: Rainey et al. (2017)

As stated earlier, equity crowdfunding can be regarded as an alternative to the traditional venture
capital (VC) and angel investment. Before crowdfunding was born and became popular, small
businesses had been heavily reliant on these two options for financing their business. Table 2
demonstrates the proportion of equity crowdfunding campaigns in Germany and the UK that
could receive either form before, during, and after the campaign. In general, this portion is
consistently low across the two countries (mostly under 10%). Importantly, the rate is only high
before the campaign is ran but during and after the campaign, this rate is relatively shrunk. This
means that once the crowdfunding campaign is introduced through online platforms and starts
collecting the money, such business projects and ideas become less and less interesting to
traditional investors and angels.

30
 Table 2. Fraction of equity crowdfunding campaigns getting venture capital or business angel
funding before, during, and after the campaign (2011–2015)

Source: Hornuf and Schmitt (2016)

In alignment with the literature being reviewed previously, the success of the crowdfunding
campaigns depends on its duration. Table 3 lists several start-ups that must exit after engaging in
equity crowdfunding in Germany between 2011 and 2015. Accordingly, it is consistent across
failure cases that all of them existed after a quite long span, implying that the unsuccessful
campaign lasted very longer with at least nearly a year. It is shown from this table is when the
campaign period becomes longer, the number of investors does not increase according to the
extended duration. For example, Smarchive start-up that lasted 11 months received money from
totally 144 investors but Bloomy Days that lasted 22 months, doubling duration of Smarchive,
only got 175 investors and LeaseRad (35 months, tripping Smarchive) and Cashboard (30
months, almost trebling Smarchive) only caught totally 174 and 137 funders, respectively. This
appears to imply that longer period of time is ineffective for equity-based crowdfunding
campaigns, which is commensurate with the reviewed literature in the previous chapter.

Table 3. Exit for equity crowdfunding market in Germany between 2011 and 2015

31
 Source: Hornuf and Schmitt (2016)

2011-2015 period in Germany witnessed a high portion of successful crowdfunding campaigns

that were funded (as compared with not funded campaigns, see Figure 10). This indicates a high
successful rate for equity crowdfunding campaigns in the context of Germany. Consistent with
theorizing the role of provision of information, Hornuf and Schmitt (2016) provide the
explanation for this impressive successful rate in Germany based on its national culture. That is,
Germans generally strive for perfectionism and precision, and this focus on precision means that
funders expect to have access to the full details and provision of all related information, such as
financial facts about the venture, before making the decision. Therefore, entrepreneurs were
indirectly forced to provide updated information regarding the project progression on the regular
basis (Hornuf and Schmitt, 2016). Also, the percentage of dissolved and/or insolvent cases is
also very low as can be seen from Figure 10, which implies that equity-based crowdfunding
campaigns in Germany have great chance of success.

Figure 10. German dissolved and insolvent equity crowdfunding campaigns (2011–2015)

Source: Hornuf and Schmitt (2016)

32
Figure 11 presents some global popular portals for equity-based crowdfunding. Consistent with
Figure 4, WeFunder and StartEngine from the US are prominent platforms for equity-based
crowdfunding. In addition, SeedInvest, MicroVentures, MrCrowd and NextSeed are other
popular portals from the US. In a nutshell, it is not surprising that US-based platforms remain
most prevalent in equity crowdfunding and the US hence still holds its distinct competitive edge
in this promising financial industry given the fact that most of online platforms for crowdfunding
are US-based.

Figure 11. Leading portal for equity-based crowdfunding

Source: FundWisdom (2019)

4.2. Discussion

In general, there is a consistency between theory and practice from what have been analyzed in
the above sections. Literature highlights the importance of geography in determining the success
of equity-based crowdfunding (Burtch, Ghose, and Wattal, 2012) and empirical data have shown
that the country of origin and the locational base of the platforms are important to equity
crowdfunding activities. For example, China is the largest market for equity crowdfunding while
the US has distinct advantages in terms of technology as most of current online equity
crowdfunding platforms are from the US. Also, it has been confirmed in this chapter that longer
period of time does not work, that is, long duration for equity-based crowdfunding campaigns
appears ineffective as shorter period for running the campaign could actually attract more
funders, which is congruent with the argument made by other researchers (Lukkarinen et al.,
2016; Mollick, 2014). Moreover, the provision of financials has proven to be a critical condition
for successful equity crowdfunding, which is empirically tested in the context of Germany. This

33
is then aligned with the previous literature that states that the provision of financial information
helps to improve the understandability as one critical successful factor for crowdfunding
campaigns (Mollick, 2014). On the flipped side of the coin, however, due to the limitations of
secondary data, the role of networks and sustainable focus in driving the success of equity-based
crowdfunding remain unfortunately empirically untested in this chapter.

CHAPTER 5. CONCLUSION

This final chapter focuses on wrapping this dissertation paper up. Based on the empirical results
revealed in the previous chapter, this chapter highlights the implications derived from this
research work for both theory and practice. It first summarizes the key findings in this
dissertation and then indicates the theoretical contributions to the current research on
crowdfunding, and more importantly suggests managerial recommendations to both
entrepreneurs and crowdfunding platforms for successfully implementing equity crowdfunding
campaigns. The end of this chapter addresses several drawbacks together with directions for
future improvements.

5.1. Theoretical Implications

34
Since crowdfunding is a relatively new and emerging financing and business phenomenon, there
is a shortage of theories on this phenomenal growth (Lukkarinen et al., 2016). In fact, little
research has been conducted to understand this financial phenomenon and a holistic
understanding of this new form of entrepreneurial finance remains largely scant and missing
from the current research (for review, see Mochkabadi and Volkmann, 2018). In other words, in
spite of ongoing and growing scientific conversations, the extant body of literature on equity
crowdfunding is still infant and the scholarly knowledge of this financial phenomenon remains
widely little and fragmented and seems to fail to provide a complete picture of equity
crowdfunding (Mochkabadi and Volkmann, 2018). This lack of comprehensive knowledge
motivates more empirical studies and opens direction for further endeavors. As such, the major
contribution of the present paper is to partially fulfill this literature gap. By addressing this
research paucity, this study is one among initial papers that empirically address this interesting
financial phenomenon. Also, as compared to past studies that only focused on purely describing
this phenomenon (e.g. Vulkan, Åstebro, and Sierra, 2016) or addressing it from political and
legal point of view (e.g. Cumming, Meoli, and Vismara, 2018), this study provides a fresh and
holistic perspective on this financing phenomenon by addressing its importance in financing
start-ups and small-scale ventures as well as investigating the successful determinants of equity
crowdfunding campaigns.

5.2. Key Findings and Recommendations

Equity crowdfunding is one of the latest trends in entrepreneurial finance, in which investors,
who are normally the public, wish to fund a new product offerings and/or a novel business idea
in the early stages while do not directly engage in pre-purchase of the product in exchange for
ownership and share if the business can operate productively and profitably. This means that
funders participate in the future cash flows of the venture under this equity crowdfunding form.
However, as this current study is focused on addressing the successful factors for equity
crowdfunding, the managerial recommendations are not for funders but instead for entrepreneurs
to build a successful campaign. Because equity-based crowdfunding offers an alternative form to
financing the business without the costly involvement of intermediaries (Vismara, 2016), this
cost-effective method should be largely encouraged by small businesses and start-ups. The
results ultimately reveal that equity-based crowdfunding has grown immensely among

35
entrepreneurship community since the past few years and there are many successful factors that
have accounted for the growth of this financial process. While business tycoons and larger
companies have also engaged in equity-based crowdfunding (Moritz and Block, 2016),
entrepreneurs have to approach and deploy this financial form differently given their more
restricted resources and must carefully consider a number of following factors to ensure a
successful campaign:

First of all, it is important to set a suitable target fund based on the nature of product and
expectations. Depending on whether entrepreneurs are risk-seeking or risk-avoidant, they might
select to adopt keep-it-all model or all-or-nothing model when setting the minimal threshold for
target fund. Second, it is a useful advice that entrepreneurs should not schedule an overly long
duration for the campaign because it has been empirically proven in this paper that long period is
very ineffective and longer span does not result in higher number of investors and large amount
of fund. Third, a focus on sustainability would be an appealing characteristic that should be taken
into account, the business proposal and business plan in this regard can emphasize the
“paperless” approach that highlights the commitment to sustainable practice to attract investors
as most of contemporary ventures now place a heavy part on sustainable orientation to secure a
success (Bento, Gianfrate, and Thoni, 2019). Third, social media sites (e.g. LinkedIn) should be
used wisely as an effective marketing channels that connect entrepreneurs with the online public
and other peers because social media-mediated interactions help to promote the project and more
importantly strengthen the closeness between online funders and business owner to seek more
funds. Fourth, keeping the funders posted with the project progress as well as providing updated
information on regular basis are critical during the course of the campaign because this enhances
the trust and gives more related information to encourage the investments. Finally, it is
recommended that entrepreneurs choose US-based platforms for equity crowdfunding because
these platforms are technologically driven, safe and have high degree of transparency, which
have been widely trusted by many global start-ups as indicated in this report.

5.3. Limitations and Directions for Future Research

36
Without compromising what have been achieved in this dissertation work, it remains critically
important to acknowledge several limitations that exist in this paper, which provides the
direction for improvements in future research. These are discussed as below:

First, this current research paper is mainly focused on the descriptive purpose, which is aimed at
describing the practice of equity crowdfunding and its successful drivers for small firms, the
scope of this research is therefore quite broad. Although this broad spectrum allows us to
increase the study generalization or external validity, the findings must be applicable to each
single case (e.g. a particular company) or particular context (e.g. a specific market) with a
certain degree of caution. This is because the success of equity-based crowdfunding is very
contextual and depends on many situational factors, such general results here might not
accurately be applied to all enterprises and across different contexts (Lukkarinen et al., 2016).
Future researchers might want to narrow down the scope to specifically focus on an enterprise or
a single marketplace, which is expected to produce more relevant outcomes.

Second, crowdfunding activities must be subject to the local legal body but this study does not
consider the role of legal framework when considering the success for an equity crowdfunding
campaign. Recently, there has been a call from policy makers and law makers for more strictly
governing and regulating crowdfunding activities given their impact on the financing market
(Hornuf and Schwienbacher, 2017). Therefore, this missing element should be addressed by
future researchers by further taking the role of legal component into account.

Third, with the concentration on descriptive design, this study implemented a combination of
both qualitative method and quantitative method and thus acquired both non-numerical
information and numerical information from various Internet-based secondary sources so as to
resolve two main research questions. Broadly, former papers in the stream of equity
crowdfunding have implemented both quantitative statistical method (e.g. Hornuf and
Schwienbacher, 2018) and qualitative interview method (e.g. Estrin, Gozman, and Khavul, 2018)
but experimental methods have not been emplto investigate this financial phenomenon. Future
researchers are therefore encouraged to overcome this by undertaking more experimental studies
using field observational data from the crowdfunding platforms to better understand the “causal”

37
impact of those antecedents that have been reviewed in this paper on equity-based crowdfunding
success.

Finally, because the scope of this research has solely targeted start-ups and small enterprises,
whether the successful determinants identified in this report are also appropriate for large-scale
companies is doubted. In other words, this study has yet to examine the case of large businesses
in relation to equity crowdfunding, given the limited research scope. As part of future research,
perhaps researchers can advance this promising area of research by conducting comparative
research in order to compare successful crowdfunding factors between small businesses and
large ones.

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