Stakeholders in equity-based crowdfunding: respective risks over the equity crowdfunding lifecycle

Abstract

Objective. The purpose of this paper is to present a thorough research on the risk categoriesand specific risk factors that each immediate stakeholder faces over the equity crowdfundinglifecycle.Methodology. This study employs an exploratory approach, supported by current data tounderstand the global equity crowdfunding setting and the stakes for major players.Findings. Findings show that, although equity crowdfunding, can be a unique opportunityespecially for underdeveloped countries and SMEs who have difficulty obtaining fundingelsewhere, is also a potential peril for those who ignore or underestimate the overall andstand-alone risks that come along with each stage of the process. The findings haveimplications for all ventures seeking alternative financing venues, investors and equitycrowdsourcing platforms. Furthermore, they pinpoint potential areas of further investigationfor researchers and policy makers.Originality/Value. This study differentiates itself from the limited number of papers onequity crowdfunding, as a newly developing field of academic research, in that it underscoresfinancial, regulatory, operational, reputational and strategic risks from several perspectivesand offers recommendations on how these risks can be addressed.