Navigating the Start-Up Financing Funding Gap: Comparing Business Angels and Crowdfunding

This study presents empirical comparisons of fundraising outcomes for entrepreneurial ventures supported by business angels and crowd investors. Utilizing a comprehensive multi-year dataset derived from repeated annual surveys within the business angel (BA) and equity crowdfunding (ECF) markets in Italy, our findings reveal that, despite investing in comparable start-ups, ECF-backed ventures secure lower capital amounts than BA-backed ones. Moreover, ECF-backed start-ups acquire a smaller proportion of capital. These outcomes imply that equity crowd-funding and business angels are not perfect substitutes but rather function as different financial channels for inherently heterogeneous start-ups characterized by distinct funding requirements.