Exploring the equity crowdfunding phenomenon: An analysis of regulations, tax incentives, and the fight against corruption

Equity crowdfunding is becoming more and more an important source of funds to early-stage entrepreneurial firms, in both developed and developing countries. Its rapid growth was likely due to a combination of favourable – and unfavourable - circumstances which have made it a multi-billion-dollar industry worldwide. On the one hand, the 2008 financial crisis has tightened credit availability; on the other hand, financial innovations driven by FinTech companies (including equity crowdfunding platforms) have provided consumers with an excellent opportunity to become investors and take advantage of their knowledge in financial matters. Moreover, financial innovations and the new instruments available have facilitated credit access for entrepreneurs, enabling them to seek funding from anyone. Equity crowdfunding seems thus to have the potential to fundamentally change the investment and financing process, as well as to provide greater transparency especially in countries where high levels of corruption discourage any form of public or private investment. The academic literature on this topic has analysed the crowdfunding market with growing interest. However, the research and knowledge of this new phenomenon are still limited, and some questions do still arise. This doctoral thesis aims to address the topic of equity crowdfunding in Europe and Latin America (the higher performing developing country in terms of utilizing crowdfunding, excluding Mainland China). In particular, the three papers that constitute it explores specific strategies to drive equity crowdfunding growth and promote its use in financing entrepreneurship. This dissertation draws inspiration from the following research questions: (i) Why do we need a harmonised regulation of crowdfunding in Europe? What are the challenges and risks to deal with? (ii) Do tax incentives promote crowdfunding investment in Europe? (iii) Does the fight against corruption increase the investors’ confidence in equity crowdfunding? Answers to these questions provide an important step towards a better understanding of the functioning of crowdfunding markets.