Equity-based Crowdfunding in the UK: Obtaining Subsequent Financing from a VC after a Successful Campaign

Abstract: Equity crowdfunding has achieved a high popularity in the UK throughout the last years. However, most researchers within this field primarily focused on the success factors of an equity crowdfunding campaign while only little is known about the post-campaign effects. Therefore, the aim of this thesis is to determine which patterns of characteristics successfully equity crowdfunded companies that received subsequent venture capital have in common. Based on a literature review on equity crowdfunding and reward-based crowdfunding, a statistical analysis was conducted based on secondary data from Pitchbook, an online database for public and private companies. The dataset included ventures which had a successful equity crowdfunding campaign between fiscal years 2015-2020 in the UK. This dataset was divided in two samples, one being the final sample with companies that achieved a venture capital funding after their successful equity crowdfunding campaign, and a control sample where ventures were not able to acquire venture capital. The statistical analysis of the data demonstrated that companies which had more sources of funding before the equity crowdfunding campaign have a higher probability of receiving venture capital funding. Although the correlation is relatively weak, the same statement holds true for companies with a technological product. On this basis, the authors recommend companies that plan to conduct an equity crowdfunding campaign and receive subsequently venture capital to acquire more sources of funding before their campaign. At the same time, it is recommended that if a company operates in the technological sector, to list their equity crowdfunding campaign respectively within that category. Further research is needed to identify the impact of receiving other sources of funding after the equity crowdfunding campaign and what role patents play for technological companies in terms of receiving subsequent venture capital.