UK Equity Crowdfunding Success: The Impact of Competition, Brexit and Covid-19

This paper studies the impact of competition, Brexit and the Covid-19 pandemic on UK equity crowdfunding success. Using data from Crowdcube, we account for competition from different angles, varying from within the platform and between Crowdcube and its competitors, while controlling for various campaign and firm characteristics. Our sample period, 2011-2020, covers two unprecedented events, Brexit and the Coronavirus outbreak. We find that competition and the pandemic are positively related to crowdfunding success, while Brexit appears to impose a detrimental impact on small and medium enterprises' (SMEs') equity financing via online crowdfunding. Our results highlight the bright-side effect of competition, in which crowdfunding investors could back different campaigns and do not appear to be drawn away by contemporary campaigns in other competitive marketplaces. Investors were also reportedly more active during the pandemic. As SMEs are likely to be most negatively impacted by Brexit, future policy interventions to stimulate capital investment and replace European funding remain crucial to moderate uncertainties.