Financing Early Stage Cleantech Firms

In this article, we analyze the financing of firms in the Cleantech sector that has successfully raised equity crowdfunding on platforms in 16 European countries. We find that firms with lower total assets and higher cash balances raise greater amounts of crowdfunding. In the period precrowdfunding, illiquid firms raise less finance and firms with greater assets raise more debt. In the postcrowdfunding period, crowdfunded firms raise significantly greater amounts of external equity, suggesting signaling effects. Our study highlights the ameliorating liquidity effects of crowdfunding, which are especially important in early stage firms developing new technologies.