The Impact of Amount Raised through Equity Crowdfunding on Firms' Financial Performance in the Short and Medium Term (Ekonomista)

Summary

• The study analyzes financial data from 163 Polish companies that conducted a total of 188 equity crowdfunding (ECF) campaigns between 2014 and 2023.p.1
• An initial sample of 243 companies that completed at least 1 campaign was evaluated using data from the EMIS database and financial statements.p.6
• Fixed-effects regression models demonstrated a statistically significant negative impact on EBITDA margin in the first year post-campaign (β₁ = −22,54).p.9
• Quantile regressions showed consistent negative effects on ROS across all 3 post-campaign years for firms in the 0,25 quantile (β1;0,25 = −0,25, β2;0,25 = −0,22, β3;0,25 = −0,27).p.11
• For highly profitable companies in the 0,9 quantile, equity crowdfunding raised yielded a positive ROS effect in the second post-campaign year (β2;0,9 = 0,09).p.11

Key insights

1. Capital raised through equity crowdfunding does not automatically improve issuer financial performance in the short or medium term.p.1
2. Prior empirical literature noted that bankruptcy rates among crowdfunded firms were 8,5 times higher than among non-crowdfunded firms.p.4
3. Fixed-effects model estimates show a statistically significant temporary decline in EBITDA margin in the first year following capital inflow.p.9
4. Across the full sample of companies, no statistically significant relationship was identified between capital raised and return on assets (ROA).p.8
5. Quantile regressions demonstrate that capital raised worsens operating profitability for companies situated in lower efficiency quantiles.p.1
6. Companies with high operating efficiency generate scale benefits from larger funding amounts, resulting in improved medium-term sales margins.p.11
7. Return on sales (ROS) displays the highest sensitivity to the level of raised funds among the evaluated performance metrics.p.12