Determinants of equity crowdfunding success in Norway : an empirical study of how different factors affect the success of equity crowdfunding in the Norwegian market

Abstract

Equity crowdfunding is a new form of Fintech which has the potential to disrupt traditional models of financing in Norway. The crowdfunding platforms use an all-or-nothing strategy, meaning if the fundraising objective is not met, the founders will not receive any money. Thus, it is critical for entrepreneurs to meet or surpass their crowdfunding project's funding objective. Hence, it is essential for the founders to know which factors impact the outcome of the campaign and what kind of effect they have. This thesis, therefore, investigates the determinants of equity crowdfunding success in Norway. To conduct an analysis on the determinants, the study employs logistic regression. The analysis is based on a sample of 144 campaigns compiled from a manual collection of Norwegian equity crowdfunding platforms, Dealflow and Folkeinvest, from 2017 to the beginning of 2021. Our findings suggest that minimum objective, duration, and updates on Facebook to be significant determinants of equity crowdfunding campaign outcome in Norway. A decrease in the minimum objective and campaign duration period increases the probability of success, and having updates on Facebook during the campaign period is found to also increase the probability of success. Furthermore, within the social media sub-group, we find that an increase in LinkedIn connections positively influences success. This study contributes to the existing literature by providing insights into which factors in a unique market, such as Norway with high social welfare and trust, may impact the outcome of an equity crowdfunding campaign. Furthermore, it is evident from our research that a country with a high level of trust may require less effort in developing their campaign characteristics in order to be successful. Further, we contribute to better understanding of investment decision-making processes, which is of great relevance to entrepreneurs, investors, and platforms in such a market.