Exploring the viability of equity crowdfunding as a fundraising instrument: A configurational analysis of contingency factors that lead to crowdfunding success and failure

With the growth in the use of crowdfunding platforms for fundraising, analysis of the key factors associated with successful crowdfunding has emerged as an interesting and oft-researched topic. Nonetheless, the equity crowdfunding market is still relatively under researched. The purpose of this paper is to explore how contingency factors combine and causally connect in leading to possible success or failure in equity crowdfunding rounds. To reach this goal, a configurational approach was chosen. Qualitative comparative analysis (QCA) is a suitable method for this topic because of its ability to identify and assess different combinations of conditions that explain certain outcomes. The paper uses the fuzzy-set qualitative comparative analysis (fsQCA) to examine the casual configurations of 344 projects posted on the leading UK crowdinvesting platform (Crowdcube) from March 2016 to the beginning of November 2017. Six antecedent conditions capable of positively or negatively influencing the outcome of an equity crowdfunding campaign were identified through a review of the literature. Four refer to the firm (firm age, industry sector, number of founders or CEOs, and founder or CEO gender) and two relate to the funding round (presence of rewards and number of pictures). The configurational analysis reveals that crowdfunding success and failure are associated with different combinations of conditions. Moreover, multiple configurations of these conditions are associated with both crowdfunding success and failure. However, for each of the crowdfunding outcomes – success and failure – there is a single combination of conditions that is clearly superior to the other configurations in accounting for the observed outcome. Among the sampled firms, crowdfunding was found to be successful for start-ups with a large number of founders and numerous pictures. Crowdfunding was found to fail in firms that have no female founders, that are in traditional sectors (non-cleantech firms), that are not start-ups, and that publish few pictures but offer rewards for investors