Determinants of Overfunding in Equity Crowdfunding: An Empirical Study in the UK and Spain

Crowdfunding constitutes one of the financial solutions to achieve the sustainable development goals, by fostering innovation and economic growth. This paper conducts an empirical two-country analysis (the UK and Spain) of characteristics of successful offerings to assess the distribution of overfunding in equity crowdfunding. Unlike previous research, which has usually comprised campaigns posted on single-country portals, our study is based on an international leading platform operating with country-differentiated websites, Crowdcube. Such an approach allows us to identify influential factors which are dependent on country and, simultaneously, to control for those platform-related factors. To focus on the overfunding distribution, a quantile regression methodology is adopted for a total sample of 299 overfunded campaigns from 2015 to 2018. Overall, empirical results show that the effects of key campaign features (equity, voting rights and social capital) are stronger and more significant at the 75th and 90th quantiles for the overfunding level and the number of investors. Furthermore, we find significant differences across countries, which persist along the distributions of overfunding. Yet, interestingly, between-country differences in overfunding level vanish for the technological sector. Our research provides further insights into the relation between equity crowdfunding and sustainable finance.