Armin Schwienbacher

SKEMA Business School · Department of Finance

We use novel entrepreneur‐backer data to study the extent to which spillovers arise between projects displayed on crowdfunding platforms. We find that backers decide to back a particular project based on past contributions not only to that project—as documented by prior work—but also to other contemporaneous projects—a novel result. Our difference‐...

Private equity firms are often criticized for their short-term view when preparing their portfolio companies for the IPO. We investigate whether private equity-backed IPO firms are riskier than other IPO firms at the IPO and beyond. Our initial results show that they are not riskier than their peers at time of the IPO. However, PE firms often stay...

Private equity firms are often criticized for their short-term view when preparing their portfolio companies for the IPO. We investigate whether private equity-backed IPO firms are riskier than other IPO firms at the IPO and beyond. Our initial results show that they are not riskier than their peers at time of the IPO. However, PE firms often stay...

Plain English Summary Do family co-founders help novice entrepreneurs more than non-family co-founders over the first 10 years of activity? We studied 1000 randomly selected UK novice entrepreneurs and assessed the effects of initial co-founding team composition on entrepreneurial outcomes 10 years later. We compared outcomes in terms of financing...

Nascent entrepreneurs often believe that their chances of success are better than those of others due to imperfect information about the competencies and accomplishments of other entrepreneurs, leading to overplacement. Theory suggests that the provision of historical outcome data of comparable projects could help entrepreneurs develop more realist...

While the prevalence of equity crowdfunding has increased, investors have had very few opportunities to exit such investments. Thus, several equity crowdfunding platforms have started considering the development of secondary markets for buying and selling shares. Using detailed data from the world's first secondary market for equity crowdfunding, w...

In this study, we examine business angels (BAs)’ appetite for investing abroad and the role played by investment and entrepreneurial experience. To investigate BAs’ propensity to internationalize their investments, we study cross-border deals and culturally distant investments. Using an international sample of US and European BA deals, we find that...

This paper examines the impact of VC ownership beyond the IPO listing on important and consequential corporate decisions in a firm's lifetime. We find that VC funds delay the initiation of dividends by approximately two years, delay the use of external growth strategies, and postpone introduction to the corporate bond market. These results are cons...

We study the extent of fraud in initial coin offerings (ICOs), and whether information disclosure prior to the issuance predicts fraud. We document different types of fraud, and that fraudulent ICOs are on average much larger than the sample average. Issuers who disclose their code on GitHub are more likely to be targeted by phishing and hacker act...

This paper examines the impact of perceived innovativeness on the success of equity crowdfunding campaigns. Building on the investor perspective, we hypothesize a positive impact of perceived innovativeness on the campaign outcome. Our database covers 191 campaigns launched in France on different platforms, drawing on over 2,000 individual assessme...

The increasing pervasiveness of technology-driven firms that offer financial services has led to growing pressure on traditional banks to modernize their core business activities and services. Many banks tackle the challenges of digitalization by cooperating with startup firms that offer technology-driven financial services and novel service packag...

We study the formation and dynamics of entrepreneurial clusters in the emerging fintech industry. Using detailed data on the almost 1000 fintech startups in France to date, we find that most fintechs are geographically clustered and that the location of new fintech startups is affected, among other things, by the size of clusters and the presence o...

A common assumption is that entrepreneurs retain more control of their venture when opting for crowdinvesting rather than venture capital. In this article, we investigate the relevance of cash-flow, control, and exit rights awarded to crowd investors in Germany, where more flexible contracts are offered than in many other jurisdictions. In Germany,...

This article surveys research on the effects of digitalization on access to finance. We focus the review on access through fintech. We review the growth of three main fintech technologies, fintech lending (incl. Peer-to-peer lending), crowdfunding and initial coin offerings. We discuss existing evidence on how fintech affects access to finance for...

This paper examines the benefits of syndicating with foreign venture capital (VC) firms for domestic VC firms in emerging markets. We find that the VC firms that are domestic to their invested companies and previously syndicated with foreign partners invest proportionately more frequently in riskier ventures. After gaining syndication experience wi...

Digitization has enabled “testing-the-waters” in entrepreneurial finance whereby investors can make nonbinding commitments in equity crowdfunding prior to an actual campaign to ascertain interest in the project. We consider whether these nonbinding equity investment commitments are informative about actual investments during the campaign and, thus,...

Social networks and personality traits of the entrepreneur affect investors’ willingness to finance start-ups, particularly in reward-based crowdfunding where observable individual characteristics are paramount. We study the impact of crowdfunding entrepreneurs’ narcissism on campaign design and campaign outcome. We distinguish between the ego-defe...

In this study, we explored the presence of correlated investment choices (i.e., herd behaviour) among international buyout funds by distinguishing among the contemporaneous and the following herding of smaller funds towards the top market players (i.e., the top quartile in terms of the fund size). In our analyses, we found that the industry herding...

Loan tranching allows banks to manage risk and facilitate firm financing, which may be essential for firms that cannot access investors from stock markets. We analyze the determinants and benefits of loan tranching by pooling the tranches of individual loans to create the largest cross-country sample of syndicated loans, covering more than 150,000...

Ever since 2004 companies located in Member States of the European Economic Area have been able to opt to incorporate in a supranational legal form, the Societas Europaea. We found that companies located in Member States where the Societas Europaea offers additional legal arbitrage opportunities benefit most. Moreover, our results show that the sto...

This chapter discusses the innovation and growth generated in small, entrepreneurial firms by the means of a new form of financing: crowdfunding. Crowdfunding has the potential to provide funding to early‐stage projects and thereby fill some of the funding gap that plague small, innovative firms. The chapter offers a general discussion on how crowd...

We investigate determinants of investment decisions in investment‐based (equity and bond) crowdfunding campaigns, using a novel investment‐, investor‐ and campaign‐level database, where equity refers to investments in entrepreneurial start‐ups and bonds to large real estate projects. We find that investors who have higher social interactions invest...

Reward‐based crowdfunding campaigns are commonly offered in one of two models in reference to fundraising goals set by the entrepreneur: “Keep‐It‐All” (KIA), where the entrepreneur keeps the entire amount raised regardless of achieving the goal, and “All‐Or‐Nothing” (AON), where the entrepreneur keeps nothing unless the goal is achieved. We hypothe...

The development of equity crowdfunding over the last 10 years has been accompanied by many successes and achievements, but also failures. At the same time, it still faces many challenges if it wants to become mainstream in entrepreneurial finance. These challenges are particularly severe in Continental Europe. This article reviews achievements made...

This paper examines how different sources of risk in reward-based crowdfunding campaigns influence the entrepreneur’s choice of targeted crowdfunding goal. This form of crowdfunding helps entrepreneurs to obtain feedback on market demand (next to raising money), since the pre-purchase decision of the crowd generates useful public information about...

We examine whether uncertainty affects the use of round numbers in investment decisions. Using unique data of more than 15,000 investments from WiSEED—the largest equity crowdfunding platform in France—for the period 2009-2016, we find that investors are more likely to invest a round number when facing greater uncertainty in equity crowdfunding cam...

We study the payment of bonuses to directors of Belgian firms listed on the Brussels Stock Exchange in 1925–1934. Directors received substantial cash bonuses which were positively related to firm performance, measured by accounting income and changes in the market value of equity. If shareholders were expropriated via the payment of excessive direc...

Entrepreneurs have started relying on crowdfunding to fund their investments. This paper surveys the literature linking crowdfunding with innovation in entrepreneurial firms. Two distinct areas are discussed. First, crowdfunding has the potential to foster innovation by offering new sources of capital to innovation-driven firms and thereby reduce t...

Entrepreneurs have started relying on crowdfunding to fund their investments. This paper surveys the literature linking crowdfunding with innovation in entrepreneurial firms. Two distinct areas are discussed. First, crowdfunding has the potential to foster innovation by offering new sources of capital to innovation‐driven firms and thereby reduce t...

Manuscript Type Empirical Research Question/Issue Where are fintech venture capital investments taking place around the world? What is the role of institutional factors on the international allocation of fintech venture capital? Research Findings/Insights We document a notable change in the pattern of fintech venture capital (VC) investments arou...

The increasing pervasiveness of technology-driven firms that offer banking services has led to a growing pressure on traditional banks to modernize their core business activities. Banks attempt to confront the challenges of digitalization by cooperating with fintechs in various forms. In this paper, we investigate the factors that drive banks to fo...

Prior research has focused on the factors that affect funding success on equity crowdfunding platforms, but a detailed understanding of the factors that drive firms to search for equity crowdfunding in the first place is lacking. Drawing on the pecking order theory, we argue that firms list on equity crowdfunding platforms as a “last resort”—that i...

This chapter presents research findings on the structure and role of underwriter syndicates in the initial public offering (IPO) process, thereby extending the list of participants beyond the lead underwriter. Although research has extensively examined role of the lead underwriter, our objective is to discuss the complementary role of the other ban...

The Internet-based crowdinvesting market in Europe has developed significantly since its start in 2007 and has become an alternative source of finance for entrepreneurs to sell securities through the Internet to small investors. This market evidences a great variety in platform design and contract forms used by crowdinvesting platforms. By analyzin...

In this paper, we show that too strong investor protection may harm small firms and entrepreneurial initiatives, which contrasts with the traditional “law and finance” view that stronger investor protection is better. This situation is particularly relevant in equity crowdfunding, which refers to a recent financial innovation originating on the Int...

Equity crowdfunding is a new form of entrepreneurial finance, in which investors do not receive perks or engage in pre-purchase of the product, but rather participate in the future cash flows of a firm. In this paper, we analyze what determines individual investment decisions in this new financial market. One important factor that may influence the...

We explore an alternative, finance theory-based explanation for the documented positive relationship between fund diversification (or lack of fund specialization) and performance in venture capital (VC). Our proposed “Risk Hypothesis” posits that the expected negative impact of diversification on fund risk induces fund managers to endogenously sele...

This paper provides insights on the crowdfunding of new alternative energy technologies by enabling inferences from large pools of small investors. We provide large sample evidence from 81 countries around the world that cleantech crowdfunding is more common in countries with low levels of individualism and more common when oil prices are rising. C...

Voting rights were initially limited to wealthy elites providing political support for stock markets. The franchise expansion induces the median voter to provide political support for banking development, as this new electorate has lower financial holdings and benefits less from the riskiness and financial returns from stock markets. Our panel data...

Le « Capital Purchase Plan » (CPP) est un des ingrédients principaux du Plan Paulson. En lien avec le CPP, les agences fédérales américaines ont investi plus de $200 milliards dans environ 700 institutions financières en 2008 et 2009. Cet article examine si le CPP en tant qu’intervention publique majeure a aidé à réduire la contribution des institu...

In this paper, we investigate whether fund-specific risk helps explain performance persistence in private equity funds, using detailed deal-level cash flow information at both the fund and deal levels. We further extend existing findings to international evidence on buyout and venture capital (VC) by testing the impact of various risk measures. We...

Using a firm-level perspective, this study examines the effect of specialization on the fundraising activities of private equity (PE) firms. We consider three dimensions of specialization: stage, industry and geographic location. Using a large sample of U.S. PE firms, we find that specialized firms raise new funds more quickly than generalists only...

We investigate the listing choice of Chinese VC-backed companies between a domestic market and foreign stock markets. Using a comprehensive sample of 2249 IPOs of Chinese companies that went public during the 1994–2013 period, we find that companies backed by Chinese domestic VCs are significantly less likely to list abroad while those backed by fo...

In this paper, we investigate drivers of corporate venture capital investment announcements. Consistent with voluntary information disclosure theories, we find that a public announcement is less likely to be made when the start-up firm is in the seed stage but more likely when the parent company is large, active in concentrated markets and in non-h...

This chapter discusses some issues at the crossroads between the Internet and banking. It focuses on the impact of the Internet on the banking industry. As the topic is still very broad and the available space limited, only a selected number of more specific themes are covered. The section “The Internet, Network Effects and the Horizontalization of...

Since 2004, companies located in member states of the European Economic Area (EEA) can opt to incorporate in a supranational legal form, the Societas Europaea (SE). Most importantly, the Societas Europaea offers the possibility to choose between the one-tier and two-tier board structure as well as to limit the extent of worker participation, two it...

This paper examines the causes and consequences of mutual fund outsourcing to different types of service providers: advisors, custodians, administrators, and transfer agents. The data indicate outsourcing is less common among bank-managed funds, funds of leading groups, but more common among funds that are distributed through third parties. Moreove...

Ces dernières années, un nombre croissant d’entreprises ont levé des capitaux auprès du grand public via des plateformes de crowdinvesting (aussi appelé equity crowdfunding ). Cela a permis à des particuliers d’accéder à des opportunités d’investissement dans des start-ups innovantes, mais surtout à de jeunes entreprises de trouver du financement....

Asset-backed securitization (ABS) can generate substantial cash inflows to the firm and thus a worthwhile source of financing when other sources become very costly. Using a hand collected sample of ABS transactions done in the US, we estimate the sensitivity to ABS proceeds of both investment and firm’s performance, arguing that if both investment...

Crowdfunding has become a new source of entrepreneurial finance. Different forms of crowdfunding exist. This analysis focuses on investment-based crowdfunding, also called-by the start-up company launching the campaign. While crowdinvesting is still limited to accredited investors in the United States until the CROWDFUND Act (Title III of the JOBS...

This book chapter reviews crowdinvesting, which is sometimes referred to as equity crowdfunding. It specifically aims at answering the following question: Is crowdinvesting transforming the crowd into small business angels? In order to answer this question, we review the securities regulation in different jurisdictions and compare crowdinvesting pr...

Research in entrepreneurship has been booming, with perspectives from a range of disciplines and numerous developing schools of thought. It can be difficult for young scholars and even long-time researchers to find their way through the lush garden of ideas we see before us. The purpose of this book is to map the research terrain of entrepreneursh...

French Abstract: Ces dernieres annees, un nombre croissant d’entreprises ont leve des capitaux aupres du grand public via des plateformes de crowdinvesting (aussi appele « equity crowdfunding » ). Cela a permis a des particuliers d’acceder a des opportunites d’investissement dans des start-up innovantes, mais surtout a de jeunes entreprises de trou...

In this paper, we investigate whether fund-specific risk helps explain performance persistence in private equity funds, using detailed deal-level cash flow information at both the fund and deal levels. We further extend existing findings to international evidence on buyout and venture capital (VC) by testing the impact of various risk measures. We...

Cet article examine le montant d’actifs transférés vers le véhicule financier dans le cadre d’une opération de titrisation par les entreprises et l’impact sur la gestion des besoins de fonds de roulement de l’entreprise qui initie cette opération. L’entreprise en question sur-collatéralise généralement le véhicule financier dans le but d’améliorer...

The Capital Purchase Plan (CPP) is one of the main ingredients of the Paulson Plan. In accordance with CPP, U.S. federal agencies invested more than $200 billion in approximately 700 financial institutions between 2008 and 2009. This article examines whether this major public intervention helped decrease systemic risk in the banking sector, using t...

Rewards-based crowdfunding campaigns are commonly offered in one of two models: “Keep-it-All” (KIA) where the entrepreneurial firm sets a fundraising goal and keeps the entire amount raised regardless of whether or not they meet their goal, and “All-or-Nothing” (AON) where the entrepreneurial firm sets a fundraising goal and keeps nothing unless th...

This paper investigates sources of risk-taking in "reward-based" ("pre-purchase") crowdfunding campaigns. While crowdfunding helps entrepreneurs to obtain feedback on market demand (next to raising money), it may lead to project discontinuation if not enough money is raised during the campaign. This often leads entrepreneurs to raise more money to...

In this paper, we show that too strong investor protection may harm small firms and entrepreneurial initiatives, which contrasts with the traditional ‘law & finance’ view that stronger investor protection is better. This situation is particularly relevant in crowdinvesting, which refers to a recent financial innovation originating on the Internet a...

This study investigates characteristics of individual crowdfunding practices and drivers of fundraising success, where entrepreneurs can tailor their crowdfunding initiatives better than on standardized platforms. Our data indicate that most of the funds provided are entitled to receive either financial compensations (equity, profit-share arrangeme...

This paper explores whether private equity funds take excessive risks, using differences between he implicit incentives of managers of experienced and of novice funds for identification. We find that novice funds invest more slowly than experienced funds, contradicting the risk-taking hypothesis. However, the size of their investments, in value and...

In this paper, we explore the relationship between institutional investors and funds managers, a relatively little studied field in private equity. We study this relationship within the context of international investment flows. We address the following question: When building risk-return exposure to European private companies, which US limited par...

In this paper, we explore the relationship between institutional investors and funds managers, a relatively little studied field in private equity. We study this relationship within the context of international investment flows. We address the following question: When building risk-return exposure to European private companies, which US limited par...