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News & Updates, External publications Why do Startups use Equity Crowdfunding

Many founders of innovative start-ups use equity crowdfund-ing to finance their business. In an article for the Journal of Business Economics, Dr. Jonas Löher took a closer look at their motives for doing so. A wide-spread assumption is that only those companies that cannot find investors elsewhere use equity crowdfunding.

However, his analysis in the article “The equity crowdfunding choice: A demand-side perspective” shows a more differentiated picture. Only some entrepreneurs use this form of financing because they have no venture capital alternatives. However, if the founders do have alternatives, they either try to improve their investment conditions or optimize the non-financial added value with their decision. These must match the current organizational challenges. As a result, founders often have a clear idea of the role crowdfunding should play in financing their business.

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