Fundraising activities and digitalization: defining risk indicators for evaluating equity crowdfunding campaigns

Purpose The wide development of digital platforms permitted the birth of new financing modalities, namely, crowdfunding, where the crowd of individuals and investors can supply the necessary financial resources for venture creation and growth. While the extant literature has focused on analyzing the dynamics and features of crowdfunding campaigns, few studies have focused on understanding how crowd investors decide which ventures to invest in and which factors influence their decision-making process. Due to this gap, the purpose of this paper is to analyze the factors influencing the choice to invest in an equity crowdfunding campaign, by defining a set of indicators useful to evaluate the risk of the campaign. Design/methodology/approach An empirical research study of Italian equity crowdfunding campaigns has been conducted to identify quantitative indicators useful for evaluating the risk in a crowdfunding campaign. Findings Findings demonstrate that the risk indicators proposed to represent important gauges that investors can usefully consider ex ante to assess the degree of riskiness of the investment in the equity crowdfunding campaign. Research limitations/implications The limitations of the study regarding the size of the sample that is small due to the necessity to extract enough information in pre and post-equity campaigns. Also, the lack of historical data is another limitation. Originality/value The originality of the studies relies on the proposal of quantitative indicators for the evaluation of the risk in equity crowdfunding campaigns for "crowd" investors to reduce information asymmetries.