The JOBS Act and the boost for start-up fundraising: A Regression Discontinuity design approach

<p>Crowdfunding plataforms are becoming increasingly popular, allowing micro-entrepreneurs<br>to raise money to fund projects in various categories. The present study aims to explorar <br>the effects of the JOBS (Jumpstart Our Business Startups, JOBS) Act, which fostered<br>the crowdfunding model by smoothing several securities regulations, on fundraising, <br>attraction of backers and fundraising categories, seeking to identify ifthere has been a change <br>in the backer profile for the crowdfunding market, especiallyin the Kickstarter.com platform.<br>The empirical analysis used a Regression Discon- tinuity Design model. The discontinuity <br>lies in verifying the incentive provided by the increase in the number of backers and the <br>volume of fundraising after the Act came into effect. When assessing the results, it could be <br>noticed that the Act af- fected fundraising levels for start-up projects in 75%. In a similar <br>way, it affected the number of backers in 59%. In order to test model specification, <br>robustness tests were performed by fundraising category. The Design, Video Games and <br>Technology categories presented both positive and significant results and reinforced the<br>titleof capital increase. There was an increase of US$ 22,599 in the coefficient, which<br>represents a variation of 106% in relation to the average for the Design category.For the <br>Video Games category, the increase was of US$ 42,523, or a variation of 222% in relation <br>to the average. For the Technology category, it was observed that the effect generates an <br>increase of US$ 52,733, or a variation of 174% in relation to the average. Looking at project<br>quality and how it might attract backers, resultsfor successful and unsuccessful projects <br>and for average fundraising were estimated. The results indicate a significative increase in <br>fundraising for successful projects and that they also present evidence on a higher <br>fundraising average. The growth of the crowdfunding movement associated with the JOBS <br>Act brought more institutional and legal security to micro-entrepreneurs, backers and users <br>of crowdfunding plat- forms, demonstrating a positive effect for projects hosted on the <br>Kickstarter.com platform, boosting their volume of fundraising.</p>