Equity crowdfunding for university spin off

Equity crowdfunding (ECF) has rapidly spread around the world, however its use by university spin-offs (USOs) is still extremely limited. This study adopts an inductive qualitative research design to explore the views of CEOs and founders of the few USOs that used ECF. The research findings reveal that several reasons lead USOs to resort to ECF and bypass traditional tools. These ventures have little public (and university) support and funding, as well as they seem less attractive to traditional investors who tend to support initiatives with a high technology readiness level (TRL). ECF supports USOs through a crowd of investors who commit not only funds but also other (often missing) resources of strategic importance. Notably, this system allows USOs to have an initial test on the market, get broad consensus, and bring people on board. The results show that there are both benefits and challenges for businesses using ECF. First, the crowd provides key resources such as knowledge, networks, relationships, and skills useful for the growth and development of USOs or the related technologies. USOs received support for product/technology validation, patent development, and increasing the level of TRL. Crowd engagement was particularly high due to the contribution of USOs to the development of technologies useful for the entire community and for ethical or sustainable reasons. Investors supports the research and disclose a strong commitment to the ethical/sustainable impacts of USOs; many of them became business ambassador of the initiative. ECF campaigns and investors had a role of “facilitator” of knowledge transfer on the market and valorization of research results. Also, an increased public engagement emerged. The presence of new investors helped USOs to mitigate the uncertainty perceived surrounding the initiative. However, these new people are sometimes difficult to manage, and this requires efforts, time, and ongoing relationships. Some risks arise from investors who may use some data and some companies may compete. Crowd’s lack of scientific culture - or misinformation - is sometimes a real problem, as well as the limited presence of platform's scientific consultants. In general, the differences between applied and theoretical research need to be considered, as well as technological obstacles and the risk of not arriving at the desired output. The research is the first to analyze the connections between USOs and ECF. It contributes to the literature on crowdfunding and technology transfer and has implications for strategic decisions of CEOs/founders of USOs, universities, policymakers, governments.