Enfranchising the crowd: nominee account equity crowdfunding
- The nominee approach to equity crowdfunding pools all crowd investors into one (nominee) account where typically the platform acts as the legal owner but the crowd retains beneficial ownership. The platform plays an active digital corporate governance role that simultaneously enfranchises crowd investors with voting and ownership rights but removes the administrative burden on startups of having to deal with several hundred shareholders. Through an inter-platform and intra-platform analysis of a large sample of 1,018 initial equity crowdfunding campaigns, this paper assesses both the short-term and the long-term impact of nominee versus direct ownership. It finds that nominee initial campaigns are on average more successful than direct ownership campaigns in that they are more likely to succeed, raise more funds, attract overfunding and enjoy greater long run success in terms of successful seasoned equity crowdfunded offerings, numbers of such offerings, and probability of survival. These results hold inter-platform between the two main UK equity crowdfunding platforms (Seedrs and Crowdcube) as well as intra-platform, using the post-2015 quasi-natural experiment when the nominee approach became an option for startups raising capital on Crowdcube.
Author: | Jerry CoakleyORCiDGND, Douglas J. CummingORCiDGND, Aristogenis Lazos, Silvio VismaraORCiDGND |
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URN: | urn:nbn:de:hebis:30:3-624712 |
URL: | https://ssrn.com/abstract=3969371 |
Parent Title (English): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 664 |
Series (Serial Number): | CFS working paper series (664) |
Publisher: | Center for Financial Studies |
Place of publication: | Frankfurt, M. |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2021 |
Year of first Publication: | 2021 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2021/11/30 |
Tag: | Entrepreneurial finance; corporate governance; nominee account |
Issue: | April 9, 2021 |
Page Number: | 49 |
Note: | Coakley and Lazos are grateful to the ESRC for funding under grant number ES/L011859/1. |
Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Sammlungen: | Universitätspublikationen |
Licence (German): | Deutsches Urheberrecht |