The purpose of this study is to identify the difference in firm performance and employment growth between successful and failed capital procurement through equity-based crowdfunding. We conduct an empirical analysis using entire crowdfunding projects that attempted to raise capital through equity-based crowdfunding in South Korea in 2016. We summarize our findings as follows. Descriptive statistics show that the survival rate, sales growth rate, profitability growth, absolute employment growth, and employment growth rate of companies with successful crowdfunding are higher than those of companies with failed crowdfunding. However, from the difference analysis, we do not find a significant difference in the survival rate, sales growth rate, and profitability growth between companies with crowdfunding success and companies with crowdfunding failure. We find that the absolute employment growth and employment growth rate are significantly higher for companies that succeeded in crowdfunding projects compared to companies that did not. In this study, we find that the characteristics of these firms that are conducting or verifying new projects through equity-based crowdfunding financing are similar to those of prior studies results confirming the short-term effects of entrepreneurial activities or new business activities on economic performance and employment growth. In particular, it is very meaningful to confirm that the direct effect of employment growth is also found in start-up firms that raise capital through equity-based crowdfunding. By investigating the difference in firm performance and employment outcomes according to the results of equity-based crowdfunding investment, this study provides useful insights to investors for their efforts to validate participation in crowdfunding. Also, our study raises important policy implications for regulators in their efforts to resolve unemployment and the lack of capital problem for startups and new businesses.
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