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(Im)perfect Substitutes: Business angels and crowd sourced start-up funding

Year: 2025

Type: article

Abstract: This study provides comparative empirical evidence on the fundraising outcomes and the post-funding performances of ventures supported by either business angels or crowd-investors. Building on a multi-year original dataset combining repeated annual surveys on both angels and equity crowdfunding (ECF) markets, we find that while investing in similar companies, ECF-backed ventures raise less capital than BA-backed ones, acquire a smaller percentage of capital and are less likely to raise follow-on equity financing. These results suggest that ECF and BA are imperfect substitutes that act as screening mechanisms of unobservable heterogenous firms with different risk profiles, growth trajectories and funding needs.

Source: International Review of Economics & Finance

DOI: 10.1016/j.iref.2025.104532

Authors: Stefano Bonini, Vincenzo Capizzi, Giancarlo Giudici, Francesca Tenca

Institutions: Stevens Institute of Technology, Università degli Studi del Piemonte Orientale “Amedeo Avogadro”, Politecnico di Milano

Language: English

Topic: FinTech, Crowdfunding, Digital Finance

Subfield: Management Information Systems

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $1,930