There are several academic research streams dedicated to equity crowdfunding. Academic writing surrounding equity crowdfunding is nascent. Ultimately, research streams focus on signaling and information asymmetry exploring how information is communicated around an investment, evaluating the regulatory need for equity crowdfunding, and initial return on equity crowdfunding investments.
Popular opinion seems largely skeptical about the idea of equity crowdfunding with many private venture capital firms worried that non-accredited investors don’t have the capability (or information) to successfully invest inequity campaigns.
Below is a list of early academic research into equity crowdfunding:
Equity Retention and Social Network Theory in Equity Crowdfunding: This study explores signaling related to social capital and equity retention using a sample size of 271 projects listed on UK platforms between 2011 and 2014.
Information Cascades Among Investors in Equity Crowdfunding: Much like traditional finance, communication between investors of equity crowdfunding play an important role in the success of crowdfunding campaigns. Campaigns that list information about investors can increase the appeal of the campaign.
Returns on Investments in Equity Crowdfunding: One of the first studies to look at long term return on investment of equity campaigns. The data set explores 212 successfully funded UK campaigns between 2011 and 2015. The study found that the expected annualized return for an initial crowdfunding investors is 8.8%. This translates into “an overall annual value creation of 25 million pounds.”
Should securities regulation promote equity crowdfunding? The study focuses on equity crowdfunding in Germany and asks the question about the regulatory need for equity crowdfunding. Optimal regulation of equity crowdfunding is dependent on the available of other early-stage financing.
Signaling in Equity Crowdfunding: A continuation of above research. The study finds that some signals are more important including the amount at which a founder retains equity and provides details about risk. These signals are more important than signals related to social and intellectual capital (such as patents).