Is Equity Crowdfunding a Good Tool for Social Enterprises?

Abstract

Equity crowdfunding is an emerging financing tool that can help social start-ups and firms to collect people and resources around a project. This paper focuses on equity crowdfunding. We look at this as a complementary financing channel useful for promoting innovation and social change by cutting down the traditional features of financial investment. Our unique data set regards all the 104 Italian equity crowdfunding campaigns, launched by different platforms on the Italian equity crowdfunding market from 2013 to 2017. Our aim is twofold: (a) to describe the characteristics of the social firms which have had resource to equity crowdfunding and (b) with a logit model, to investigate which factors influence the success of the campaign, in particular by the social orientation of the issuers. The results suggest that social firms' investment offerings are not different from those of non-social ones, but so far, the Italian equity crowdfunding market does not seem suitable for supporting the financial needs of this type of firms, on the side of either investors or firms.