Tallinn University of Technology

On December 9th, Mari-Liis Kukk, a PhD student at TalTech’s Department of Economics and Finance, defended her doctoral thesis “Monetary Return Crowdfunding: Social Roots but Real Losses”. Her thesis explores monetary return crowdfunding, which allows mostly small entrepreneurial firms to raise capital from many, often non-sophisticated investors. The author notes that monetary return crowdfunding, a regulated financial service in most parts of the world, has evolved from earlier forms of crowdfunding that were built mostly on altruistic motives. To ensure monetary return crowdfunding acts within the best interests of all stakeholders involved, it is important to bring additional attention to frameworks that lead to increased efficiency. The doctoral thesis is based on three published articles:

The first publication, titled “Institutional Drivers of Crowdfunding Volumes” studies institutional factors that may explain the relatively large country-level heterogeneity of global crowdfunding volumes. The paper highlights regulatory aspects and e-service culture as important characteristics explaining why some countries seem to be more accepting of crowdfunding. Importantly, the paper also tests institutional characteristics against the volumes of each type of crowdfunding separately and suggests that the mechanisms driving acceptance appear rather similar between them. 
The second publication, titled “The Debt-Equity Choice in Crowdfunding: A Two-method Approach” explores the characteristics that help explain which firms tend to opt for either debt- or equity-based crowdfunding. The results suggest that equity crowdfunding is used by firms that are in an earlier phase of their business cycle and require smaller amounts of capital, while debt crowdfunding is preferred by more mature start-ups that are growing quickly and require larger amounts of capital. The results also suggest that information asymmetry remains a persistent issue for SMEs when raising funds even in the relatively public crowdfunding setting.
The third publication, titled “Predicting business failure after crowdfunding success: Are platforms the unsung heroes?” explores the post-campaign lives of firms that were successful in raising funds through crowdfunding. The paper takes an investor protection viewpoint, exploring which company-, campaign- and platform-level characteristics may help explain firm survival in the post-offering period. The results indicate that a high level of disclosure expected from firms raising funds seems to have helped raise investor protection levels, while there remains information embedded in the active phase of the campaign that could also be extracted to provide investors with additional information. Further, the results indicate that the platforms mediating the campaigns are capable of offering significant input into investor protection but the ability or willingness of individual platforms to do so seems heterogeneous.
Associate Professor Laivi Laidroo (primary supervisor), Senior Lecturer Mari Avarmaa (co-supervisor) 
Professor Ramona Rupeika-Apoga (Faculty of Business, Management and Economics, University of Latvia, Latvia)
Professor Lars Hornuf (Faculty of Business Studies and Economics, University of Bremen, Germany) 
The thesis is available here:  LINK


This work was supported by Tallinn University of Technology ASTRA project, TTÜ Development Program 2016-2022, Grant/Award Number: 2014-2020.4.01.16-0032; by the European Union’s Horizon 2020 Research and Innovation Programme, Grant/Award Number: 952574.