When policy makers want to protect investors in equity crowdfunding: Does it have regional implications?

Abstract

This study investigates whether a policy that aims to protect investors in young unlisted companies benefits regional outsiders defined as those ventures located in regions that are usually less likely to receive equity finance. It focuses on the UK equity crowdfunding market in which a policy was introduced that imposed investment caps on unaccredited investors only, in the name of protection. The findings of this study reveal that this type of regulation may increase the likelihood of regionally disadvantaged ventures at raising capital. Despite this increase, they are still less likely to issue equity successfully.