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An exploratory analysis of Title II equity crowdfunding success

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  • Stanislav Mamonov
  • Ross Malaga
  • Janet Rosenblum

Abstract

The passage of the Jumpstart Our Business Startups Act (JOBS Act) ushered in a new wave of equity crowdfunding in the United States. Title II of the JOBS Act aims to make it easier for new ventures to raise funds from accredited investors. The number of Title II crowdfunded projects is growing rapidly. Based on data for US online 506(c) offerings across 17 leading platforms, more than $1.49 billion in capital was committed to Title II projects through May 2016. Our analysis of Title II offerings from these platforms reveals that real estate ventures are the single largest category with more than $383 million in committed capital, yet only ~50% of the crowdfunded real estate offerings reach the full amount of the requested capital. Text mining of the real estate project descriptions reveals the critical facilitation role played by the successful crowdfunding platforms in reducing the information asymmetry between the entrepreneurs and investors by performing due diligence on the potential Title II investment opportunities.

Suggested Citation

  • Stanislav Mamonov & Ross Malaga & Janet Rosenblum, 2017. "An exploratory analysis of Title II equity crowdfunding success," Venture Capital, Taylor & Francis Journals, vol. 19(3), pages 239-256, July.
    • Handle: RePEc:taf:veecee:v:19:y:2017:i:3:p:239-256
    DOI: 10.1080/13691066.2017.1302062
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    Cited by:

    1. Suzanne K. Hayes & Bree L. Dority & Sarah J. Borchers, 2020. "Equity Crowdfunding Success: An Examination Of Title Ii Offerings," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 25, pages 9-25, June.
    2. Sarah Borchers & Lee M. Dunham, 2022. "Tapping of the crowd: The effect of entrepreneur engagement on equity crowdfunding success," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 46(2), pages 324-346, April.
    3. Kamran Ahmed Siddiqui & Mohammad Emad Al-Shaikh & Ishtiaq Ahmed Bajwa & Omar Alenzi, 2021. "Venture capital challenges in Saudi Arabia," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(3), pages 291-302, March.
    4. Inessa Love, 2020. "Entrepreneurial Access to Finance in the US," Working Papers 202004, University of Hawaii at Manoa, Department of Economics.

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