Entrepreneurs signaling: promoting equity crowdfunding in Lebanon

Purpose - This paper aims at shedding light on the entrepreneurs' perception towards crowdfunding as a new mean for raising capital, and their willingness to send appropriate signals to the potential fund providers/backers. Design/methodology/approach - The research strategy is based on three methodological approaches: desk research on online sources, a map of the crowdfunding phenomenon, and a quantitative approach with a survey performed between June and December 2020. The survey covers a sample of 147 Small and Medium enterprises (SMEs) and startups, in addition to semi-structured interviews with 10 entrepreneurs. Findings - The study reveals that between losing their work and losing part of their firms' equity, entrepreneurs are keen on sending positive signals to backers. Moreover, they are willing to adopt a new way of thinking, as their primary goal is to save their firms, their jobs, and their source of income. The research highlights the concern of entrepreneurs of losing reputation, losing intellectual property, losing control, and of becoming only shareholders in their enterprises. Research limitations/implications - The main limitation in this paper is that no single study in Lebanon adequately covers the topic and thus extensive research has been carried out on crowdfunding across the world and analyzed in the Lebanese context. Practical implications - Overcoming funding challenges can reduce brain drain, promote a culture of entrepreneurship, serve the economy, combat poverty, achieve more equitable society, increase the levels of expectations, and turn the flywheel. Moreover, the paper presents clear implications for the field of policy-making both in developing and developed countries. Originality/value - Considering the serious financial disintermediation and liquidity shortage Lebanon faces, the findings of this study show how important changing entrepreneurial culture and behavior is, and the crucial role crowdfunding could play in providing funds for the SMEs that form 95% of the total business sector in Lebanon.