Competitive Frontiers in Equity Crowdfunding: The Role of Venture Capitalists and Business Angels in the Early-Stage Financing Industry

The issue of the stimulation and funding of young or newly created SMEs has been discussed in recent years by professionals, academia, bankers and policymakers, in the context of the capital constraints that have been a part of the economic recession that followed the 2007–2008 global financial crisis. In this environment of constrained lending, it is crucial to shed light on an opaque segment of the capital market industry that is well suited to filling the equity gap. The participants early-stage financing include institutional as well as non-institutional investors, such as technology parks, venture incubators, business accelerators, academic spin-offs and the recently emerged equity crowdfunding platforms. This chapter provides an insight into the roles these different actors can play as a way of investigating whether equity crowdfunding platforms will challenge or complement the existing sources of early-stage financing.