Does equity crowdfunding benefit ventures located in high unemployment regions?

This study investigates whether equity crowdfunding is beneficial for ventures located in high unemployment regions. Employing data from 1172 initial offerings conducted in the UK market, the findings of this study reveal that these ventures exhibit superior campaign outcomes. Their offerings are more likely to reach the target and get oversubscribed. They also enjoy a higher number of investors. Results also suggest that although equity crowdfunding decreases their likelihood of failure, these ventures are still more likely to fail. The growth of a young company is considered to be a driver of economic growth. Its growth depends on the capacity of the entrepreneur at raising capital. There are regional disparities regarding capital allocation. Companies located in regions with poor economic conditions are less likely to raise capital. Equity crowdfunding may have the capacity to promote regional democratization because it offers a wider set of investors and all investments take place online. This article argues that equity crowdfunding may offer a better chance to entrepreneurs located in high unemployment regions at raising capital. It may help them with the survival of their companies as well. Thus, the principal implication of this study is that entrepreneurs located in high unemployment regions may consider choosing equity crowdfunding as a financing option because they may stand a better chance at raising capital. It may decrease the likelihood of failure for their ventures as well.