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Pleasing the crowd: the determinants of securities crowdfunding success

Elena Smirnova (Department of Marketing, Management and Finance, SUNY College at Old Westbury, Old Westbury, New York, USA)
Katarzyna Platt (Department of Marketing, Management and Finance, SUNY College at Old Westbury, Old Westbury, New York, USA)
Yu Lei (Department of Marketing, Management and Finance, SUNY College at Old Westbury, Old Westbury, New York, USA)
Frank Sanacory (Department of Mathematics, SUNY College at Old Westbury, Old Westbury, New York, USA)

Review of Behavioral Finance

ISSN: 1940-5979

Article publication date: 1 May 2020

Issue publication date: 27 April 2021




Since May 2016, small firms have been able to issue debt and equity securities in accordance with the Securities and Exchange Commission's “Regulation Crowdfunding”. This regulation provides unsophisticated investors a chance to participate in the securities markets, and it gives small businesses an opportunity to raise funds. This paper investigates the determinants of crowdfunding success, security design in a crowdfunding setting, the amount of crowdfunding campaign proceeds and campaign duration.


The sample used in this study is based on 750 completed securities crowdfunding offerings that were launched between May 2016 and May 2018. The data on crowdfunding issues were webscraped from Form C filings available through SEC EDGAR filing system. Additional data were hand-collected from a variety of platforms that list and aggregate crowdfunding offerings.


We show that relatively larger and more profitable companies have a better chance to achieve crowdfunding success. We find that the issuance of equity results in a lower probability of success compared to issuing debt. In addition, the issuance of equity is negatively correlated with the amount of proceeds from a crowdfunding campaign. A novel finding is that a choice of a funding instrument has a negligible impact on the amount of proceeds. This finding, combined with reduced probability of success for equity issuers, can be interpreted as a signal to rely more on debt and convertibles when designing crowdfunding campaigns.

Research limitations/implications

Organized under “Regulation Crowdfunding,” the US securities-based crowdfunding market has been operating for several years. Relative to other securities markets it is still considered to be in its infancy. Given a relatively small data sample, the results have to be interpreted with caution.

Practical implications

The paper shows that small businesses and unsophisticated investors can benefit from securities-based crowdfunding, which is subject to oversight of the Securities and Exchange Commission (SEC). Although the mission of the regulator is to protect investors, the SEC took on a rather relaxed approach in regulating types of instruments used in crowdfunding. Our paper shows that equities, including “Simple Agreements For Future Equity” (SAFEs) might not be the best choice for crowdfunding success. This sentiment is mirrored in law literature which considers securities known as SAFEs more suitable for venture capital campaigns rather than for crowdfunding.


The paper adds value to the novel field of securities-based crowdfunding by testing several hypotheses on the crowdfunding success, the amount of proceeds and campaign duration.



Smirnova, E., Platt, K., Lei, Y. and Sanacory, F. (2021), "Pleasing the crowd: the determinants of securities crowdfunding success", Review of Behavioral Finance, Vol. 13 No. 2, pp. 165-183.



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