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Book part
Publication date: 22 November 2016

Alina Dibrova

After the great economic crisis of 2008 the absolute outcome of which is still argued, the topic of alternative investment possibilities, such as business angels…

Abstract

After the great economic crisis of 2008 the absolute outcome of which is still argued, the topic of alternative investment possibilities, such as business angels, crowdfunding, peer-to-peer investments, were broadly highlighted in the European Union member states. Few suggest that in spite of the floating understanding of the topic, alternative investments managed to significantly increase the access to finance for start-ups and small and medium enterprises (SMEs) providing the overall support to economic recovery. The positive effects of alternative investment market development is now a matter of fact – recent studies suggest European alternative finance market to reach 2,957 million of euro by 2014. On the other hand, the absence of overall awareness of entrepreneurs about the alternative investment possibilities, still weak legislative regulation, market specifics, and other challenges alike are hindrances that do persist. The main aim of this paper is, while acknowledging the key aspects of crowdfunding, to form a grounded understanding to what extent crowdfunding might support SMEs on their way to solve the challenges of access to finance. In order to reach the goal of the research an analysis of investment specifics, prior experience of the crowdfunding investments as well as core financial needs of SMEs will be acknowledged. The main finding of the paper suggests that crowdfunding while being an excellent tool for social or entertainment project financing can hardly be a significant financing tool for the European SMEs.

Details

Contemporary Issues in Finance: Current Challenges from Across Europe
Type: Book
ISBN: 978-1-78635-907-0

Keywords

Article
Publication date: 19 June 2021

Marco Brand

To explain the new Crowdfunding Regulation to market participants and to describe the impact of the Crowdfunding Regulation on current crowdfunding business models in the…

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Abstract

Purpose

To explain the new Crowdfunding Regulation to market participants and to describe the impact of the Crowdfunding Regulation on current crowdfunding business models in the European Union.

Design/methodology/approach

This article provides an overview of the new Crowdfunding Regulation with a focus on the provisions concerning cross-border services (“European Passport”) and the new authorization requirements for crowdfunding service providers.

Findings

In particular the introduction of the European passport will open new funding sources for project owners. This together with the harmonized authorization requirements of crowdfunding service providers is expected to contribute to further growth of the crowdfunding market in the European Union. The Crowdfunding Regulation is a further step on the way to a Capital Markets Union in Europe and regulates crowdfunding for the first time on a European level.

Practical implications

The Crowdfunding Regulation does not cover all existing crowdfunding business models in Europe (e.g., consumer as project owners and qualified subordinated loans are exempted). Insofar, the rules of the Member States continue to apply with the consequence of a partial fragmentation of applicable regulations.

Originality/value

Expert guidance from experienced financial-services lawyer.

Details

Journal of Investment Compliance, vol. 22 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 23 November 2012

Stuart H. Gelfond and Anthony D. Foti

The purpose of this paper is to provide a preliminary explanation of “crowdfunding,” as defined in the Jumpstart Our Business Startups (JOBS) Act, subject to more specific…

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Abstract

Purpose

The purpose of this paper is to provide a preliminary explanation of “crowdfunding,” as defined in the Jumpstart Our Business Startups (JOBS) Act, subject to more specific rules that will be issued by the SEC later in 2012.

Design/methodology/approach

The paper provides an introduction to crowdfunding followed by preliminary explanations of the criteria for securities offerings that are exempted from traditional registration, requirements for brokers or funding portals that serve as crowdfunding intermediaries, disclosure and other requirements for the issuing company, the types of companies that would be likely crowdfunding issuers, significant risks and pitfalls potential crowdfunding issuers need to consider, and the potential effects of crowdfunding on a company's prospects for later‐stage funding such as venture capital.

Findings

The success of crowdfunding will likely depend on whether the rules to be defined by the SEC allow for a lean, efficient process for early stage capital raising or a complicated set of rules that makes crowdfunding unappealing or costly to startups and small issuers.

Originality/value

The paper provides practical guidance from experienced financial services lawyers.

Details

Journal of Investment Compliance, vol. 13 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 1 December 2022

Yilong Zheng, Yiru Wang and Sarfraz A. Mian

Tracking trends in new technology funding patterns is essential for venture scaling. The emerging advanced digital technologies (ADT) such as virtual reality (VR)…

Abstract

Purpose

Tracking trends in new technology funding patterns is essential for venture scaling. The emerging advanced digital technologies (ADT) such as virtual reality (VR), artificial intelligence (AI), blockchain and Internet-of-things (IoT) promote business innovation adaptations, and in turn, reshape the industrial landscape. To attract nascent funding for such prospective projects among the public, well-articulated project pitches that are equipped with effective marketing communication convey the projects' importance and marketability. Specifically, when the entrepreneurs and the crowdfunding platform users interact via different types of crowdfunding platforms, pitch framing, including the signaling of ADT terms, project location and fundraising goal, becomes imperative to help facilitate crowdfunding success.

Design/methodology/approach

Drawing on data collected from six leading US-based equity and reward-based crowdfunding platforms in 2020, an empirical study was performed. Using the text analysis approach, the authors examined the positive effects of incorporating technology orientation on crowdfunding success. While the effect between the project description's signaling of geographic location, fundraising goal and articulation style on fundraising success, while controlling for project and platform characteristics.

Findings

The results suggested that the technology-orientated projects are more likely to achieve better fundraising outcomes. Taking crowdfunding platform types, project locations, minimum fundraising goals and articulation with analytical and authentic into consideration, the results still hold.

Originality/value

Building on the theoretical framework of signaling theory, the authors consider the crowdfunding-specific contextual factors to enhance the understanding of the positivity impact of technology orientation. By such addition, it facilitates more effective strategic composition of entrepreneurs' fundraising conversations.

Details

International Journal of Entrepreneurial Behavior & Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1355-2554

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Article
Publication date: 5 December 2022

Yalin Wang, Yaokuang Li, Juan Wu, Lihua Fu and Ruixin Liang

Emerging evidence regarding crowdfunding challenges long-standing “gender gap” views of traditional entrepreneurial financing and indicates that female entrepreneurs may…

Abstract

Purpose

Emerging evidence regarding crowdfunding challenges long-standing “gender gap” views of traditional entrepreneurial financing and indicates that female entrepreneurs may have an advantage in crowdfunding. Yet, the literature primarily focuses on influences at the individual level, largely overlooking the interaction between gender and higher-level culture. Drawing on Hofstede's cultural dimensions, this paper aims to investigate the associations among entrepreneurs' gender, culture and crowdfunding performance, particularly in how entrepreneurs' gender and culture interact to affect crowdfunding performance.

Design/methodology/approach

Leveraging a sample of 21,730 Kickstarter crowdfunding campaigns and combining these data with data from Hofstede's study, the World Bank (WB) and the International Telecommunication Union (ITU), this study applies multilevel models to empirically investigate this question across 22 countries/regions.

Findings

This study confirms that the advantageous effect, that female entrepreneurs are likely to obtain better fundraising performance over their male counterparts, does exist in crowdfunding. Furthermore, the findings reveal that this advantageous effect of female entrepreneurs on crowdfunding performance would be reinforced when cultures of individualism and indulgence are high and culture of long-term orientation is low.

Originality/value

This study contributes to the literature on gender gaps in crowdfunding and entrepreneurial financing by adding an important culture-related boundary condition to the gender preference reported in earlier crowdfunding work. Moreover, the paper extends the knowledge about the impact of culture on crowdfunding performance and enlightens future research on leveraging multilevel modeling approach to examine the complex interplay between individuals and situations in crowdfunding.

Details

International Journal of Entrepreneurial Behavior & Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1355-2554

Keywords

Open Access
Article
Publication date: 3 November 2022

Rayan Faisal A. Makki and Stefan Van Hemmen

The purpose of this study is to investigate the initial investment's motivations and study the reinvesting motivations. The results revealed differences in reinvestors'…

Abstract

Purpose

The purpose of this study is to investigate the initial investment's motivations and study the reinvesting motivations. The results revealed differences in reinvestors' motivations of reinvestors in both winning and losing situations. Specifically, financial return and excitement motives were supported for win and loss situations, while recognition was supported for loss and pleasure in win situations.

Design/methodology/approach

The impact of intrinsic and extrinsic motivations on reinvestors was tested using the structural equation model. Furthermore, the framework was analysed with survey data from a total of 355 digital workers from Amazon Mechanical Turk, one of the world's largest crowdsourcing platforms.

Findings

The results indicate that there are differences in the motivations for reinvestors when they are in both winning and losing situations. Financial return and excitement motives were supported for win and loss situation, while recognition was supported in loss and pleasure in win situation.

Research limitations/implications

This study makes it possible to better understand the motivations behind crowdfunding reinvestment among digital workers. To build on this work, more studies should be conducted with different samples to test the generalisability of these results. Moreover, future studies on different samples could determine whether the same motivations would hold for other investors or whether another motivation would have greater impact on these reinvestment decisions.

Originality/value

While previous research on equity crowdfunding has predominantly focused on intrinsic and extrinsic motivations for participating and investing in equity crowdfunding platforms, the motives that specifically affect winning or losing situations for reinvestors have been largely overlooked.

Details

Journal of Economics, Finance and Administrative Science, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2077-1886

Keywords

Article
Publication date: 8 November 2022

Hasnan Baber, Haywantee Ramkissoon, Islam Elbayoumi Salem, Vahid Ghasemi and Ziaul Haque Munim

The purpose of this study is to suggest a reward-based crowdfunding approach and test customers’ financial contribution behaviour (FCB) as a fundraising strategy for…

Abstract

Purpose

The purpose of this study is to suggest a reward-based crowdfunding approach and test customers’ financial contribution behaviour (FCB) as a fundraising strategy for hospitality enterprises.

Design/methodology/approach

To investigate this initiative, a conceptual model motivated by the theory of planned behaviour, integrating economic, emotional, social and altruistic values, perceived risk and electronic word of mouth has been considered. Partial least square structural equation modelling is applied to test the model. Data was collected from 263 respondents across three regions Europe, Asia and Middle East and North Africa (MENA).

Findings

Findings revealed that attitude, self-efficacy and subjective norm of the customers positively influence their financial contribution intention. Further, Asian customers demonstrate significantly higher FCB in comparison to MENA.

Research limitations/implications

This study will be helpful for the hospitality players to raise the funds during the crisis and survive to pay the reward back to the customers. This study will be helpful to the crowdfunding platforms to understand the factors which influence the contribution behaviour.

Practical implications

The results of this study can encourage hoteliers and other hospitality players looking to approach their funding needs through crowdfunding by providing them a guide to maximise their possibility and level of success.

Originality/value

Hospitality businesses demand new approaches and strategies to keep operating during COVID-19 and post-COVID-19 time. This research is original to provide insights into customer contribution intentions during COVID-19.

Details

Consumer Behavior in Tourism and Hospitality, vol. 17 no. 4
Type: Research Article
ISSN: 2752-6666

Keywords

Article
Publication date: 14 November 2022

Ruichen Ge, Sha Zhang and Hong Zhao

Extant research shows mixed results on the impact of expressed negative emotions on donations in online charitable crowdfunding. This study solves the puzzle by examining…

Abstract

Purpose

Extant research shows mixed results on the impact of expressed negative emotions on donations in online charitable crowdfunding. This study solves the puzzle by examining how different types of negative emotions (i.e. sadness, anxiety and fear) expressed in crowdfunding project descriptions affect donations.

Design/methodology/approach

Data on 15,653 projects across four categories (medical assistance, education assistance, disaster assistance and poverty assistance) from September 2013 to May 2019 come from a leading online crowdfunding platform in China. Text analysis and regression models serve to test the hypotheses.

Findings

In the medical assistance category, the expression of sadness has an inverted U-shaped effect on donations, while the expression of anxiety has a negative effect. An appropriate number of sadness words is helpful but should not exceed five times. In the education assistance and disaster assistance categories, the expression of sadness has a positive effect on donations, but disclosure of anxiety and fear has no influence on donations. Expressions of sadness, anxiety and fear have no impact on donations in the poverty assistance category.

Research limitations/implications

This work has important implications for fundraisers on how to regulate the fundraisers' expressions of negative emotions in a project's description to attract donations. These insights are also relevant for online crowdfunding platforms.

Originality/value

Online crowdfunding research often studies negative emotions as a whole and does not differentiate project types. The current work contributes by empirically testing the impact of three types of negative emotions on donations across four major online crowdfunding categories.

Details

Information Technology & People, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0959-3845

Keywords

Open Access
Article
Publication date: 19 October 2022

Habibah Solehah Ramli, Md. Faruk Abdullah and Md. Kausar Alam

Islamic crowdfunding, an alternative way to finance social projects, is a new development in Malaysia. Little is known about its operation. This study aims to explore the…

Abstract

Purpose

Islamic crowdfunding, an alternative way to finance social projects, is a new development in Malaysia. Little is known about its operation. This study aims to explore the practice of Nusa Kapital, the first Islamic crowdfunding platform in Malaysia.

Design/methodology/approach

This study adopted a descriptive approach. The data was collected through document analysis and interviews with two officials of Nusa Kapital. The data gathered was analyzed through the thematic analysis technique.

Findings

This research discovered that Nusa Kapital was established considering the financing needs of the growing number of small medium enterprises (SMEs) in Malaysia. It uses the murabahah concept to make financing arrangements for entrepreneurs. Murabahah is a debt-based concept where the investors, instead of giving cash to the entrepreneurs, purchase an asset and sell it to them at a cost-plus profit. The Securities Commission Malaysia (SCM) regulates the crowdfunding operation of Nusa Kapital, which sets guidelines for the different types of investors, entrepreneurs and platforms. Nusa Kapital conducts an extensive background check of the company for its creditworthiness and takes the necessary measures for the transparency of the project's operation.

Research limitations/implications

This study has unique implications for the regulatory authorities and practitioners in Malaysia and global industries. The study explored the practical scenario of the crowdfunding institution, which will be beneficial for similar industries within and outside of the country.

Originality/value

While previous literature provides a theoretical discussion of Islamic crowdfunding, this study contributes to the body of knowledge by demonstrating its practice.

Details

Asian Journal of Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2443-4175

Keywords

Article
Publication date: 10 November 2022

Augusto Bargoni, Alberto Ferraris, Stefano Bresciani and Mark Anthony Camilleri

This article aims to investigate the status of and the trends in the intertwining of crowdfunding and innovation literature by identifying, evaluating and synthesizing the…

Abstract

Purpose

This article aims to investigate the status of and the trends in the intertwining of crowdfunding and innovation literature by identifying, evaluating and synthesizing the findings from previous research. This paper provides a bibliometric meta-analysis of the already substantial and growing literature on innovation and crowdfunding research.

Design/methodology/approach

Using a bibliometric approach, this research scrutinizes all articles that include terms related to “crowdfunding” and “innovation” (in their title, abstract or keywords) in Elsevier’s Scopus database. VosViewer and Bibliometrix package in R have been used to analyse 150 articles.

Findings

The results suggest that there are three main research clusters in the innovation and crowdfunding literature. The first cluster highlights the role of crowdfunding in fostering radical and incremental innovation. The second cluster focuses on the concept of openness and its effect on innovation in crowdfunding campaigns, while the third cluster explains the role of platforms’ innovation in crowdfunding success.

Originality/value

Taking a holistic perspective, this contribution advances new knowledge on the intertwining of crowdfunding and innovation research fields. It implies that crowdfunding is facilitating the flow of knowledge between different stakeholders, including project initiators and crowd investors, among others, as they all benefit from open innovation platforms.

Details

European Journal of Innovation Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1460-1060

Keywords

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