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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.

This study examines how narratives and legitimacy formation affect crowdfunding capital assembly from distributed, heterogeneous investors.

The study explores a dataset of 80,181 projects from Kickstarter, a rewards-based crowdfunding platform, between 2009 and 2013. We explore the link between project-related variables, legitimacy formation and outcomes.

Entrepreneurs design narratives and create project legitimacy by exploiting crowdfunding platform-specific features. First, lower funding targets and shorter campaign durations confer positive project legitimacy. Second, entrepreneurs exploit reward-levels as narrative tools that encourage funders to engage with the project. Third, visual pitches transmit a broader sociocultural narrative, leveraging emotional rather than financial reasoning. We also note certain gender effects.

Crowdfunding platforms allow entrepreneurs to pitch business ideas to a broad online audience. We show that project legitimacy, including both structural and narrative elements, is linked to crowdfunding outcomes. In particular, legitimacy is co-created through the generation of a persuasive narrative linking the entrepreneur and investor cohort.

Entrepreneurs use crowdfunding platforms to generate a coherent narrative around unfamiliar business models. Generic platform tools may be set and manipulated in online crowdfunding pitches to support project legitimacy. Ultimately, these are less important than establishing an affinity-based narrative that engages and exploits investor participation. Successful crowdfunding pitches co-author the project story with investors.

Crowdfunding has been traditionally understood as simply an online-mediated venture resource assembly tool. A narrative framework highlights the critical role of legitimacy formation in a disintermediated investment system.

Crowdfunding though existent, is still at the nascent stage in India being limited to charity and reward-based funding of creative and social projects by the crowd. The Indian regulatory authorities are in the process of formulating policies to encourage and monitor crowdfunding platforms that are based on financial return. The Indian Micro, Small and Medium Enterprises (MSME) sector in particular is facing financing problems, and crowdfunding could be a viable alternative to traditional sources of finance. In this context, the study attempts to suggest an operational framework for crowdfunding in India with special reference to the MSME sector in terms of eligibility norms, rules for investor protection, sustaining market integrity, providing a supportive infrastructure and defining the role of online crowdfunding platforms.

This is a qualitative study conducted through personal interviews based on unstructured questions. The Directors or Chief Finance Officers of MSME firms and Senior Officials (with minimum work experience of 15 years) in the SME divisions of banks (private and public) located in the National Capital Region, were interviewed to identify the perspectives on the research issues of the chapter. The sampling criterion allowed us to incorporate both investors’ and investees’ concerns regarding the research issues.

These are the inherent nature of qualitative analysis, interviewees’ individual understanding of the subject and sample size.

The study will contribute to the vital discussion prior to the government’s decision on role of equity and debt-based crowdfunding in India in the future.

The study will shed light on the fact that Indian society needs to be well informed about novel investment options such as crowdfunding. The Indian MSME sector can also discuss the opportunities offered by crowdfunding with the government to reduce their problem of access to finance.

The scope of crowdfunding in the Indian MSME sector has not been thoroughly researched, as the phenomenon is new in India. The study highlights how the use of crowdfunding by micro, small and medium firms has the potential to boost manufacturing- and service-related business activities to further increase the national income.

The purpose of this chapter was to deconstruct the underlying contradictions of crowdfunding practices and to show how crowdfunding practitioners develop a schizophrenic use of these contradictions.

The main contradictions of crowdfunding practices are introduced with theoretical references. Then short cases are used to illustrate how crowdfunding practitioners try to cope with these contradictions.

The crowd addresses many contradictions, first because it is a syncretic concept, second because online crowds are still to be proven crowds. In any case, crowdfunding practitioners do their best to take the advantage of these contradictions, and run the risk of falling between two stools.

An attempt to provide an analysis of crowdfunding as a social, and not only economic, phenomenon, to suggest avenues for further critical research on crowdfunding.

Extant literature on entrepreneurship highlights the importance of the entrepreneurs' social network in mobilizing resources for their ventures. Over the last few years, entrepreneurial crowdfunding opportunities have become a subject of growing research interest as it acts as a tool to mobilize financial resources. However, many of these studies are limited within the scope of new ventures, creative industries, and commercial entrepreneurship. In this study, we examine crowdfunding within the context of social entrepreneurship in order to gain a deeper understanding of the motivation and the characteristics of the pool of individuals that contribute to social entrepreneurial crowdfunding. Data for this study have been collected from four cases of social entrepreneurial crowdfunding campaigns. The campaigners, who raised the funds in France for social ventures based in India, shared their knowledge of 157 individuals that contributed to their crowdfunding campaign. The findings inform that crowdfunders mainly originate from the crowdfunding campaigner's helper network, such as family, friends, and colleagues. A small percentage were also acquaintances and strangers. This network of individuals was motivated to support the campaigner achieve her/his goal or was attracted to the social cause that triggered them in creating a social impact. Moreover, the crowdfunders were generally open-minded and well-traveled individuals accustomed to participating in social and voluntary activities. Our study reveals that some members of the helper network are likely to disappoint by not supporting the crowdfunding campaign, thus emphasizing a twist to the existing literature on entrepreneurship. This has practical implications that prompt social entrepreneurs to exercise their social capital, networking skills, and communication strategies to attract and expand their community of helpers in order to trigger individuals from both their helper network as well as individuals outside their current network toward crowdfunding.

In this chapter, we explore to what extent psychological contracts occur between the crowdfunded and the crowdfunders. First argument: fundamentals of finance imply a psychological dimension in financial transactions, which are at the same time contractual. Second arguments: some concrete cases of crowdfunding scandals pertain to contractual violation, which provides evidence for the importance of psychological contracts in crowdfunding projects and processes. This leads to two contributions: (1) a systematic review of the concepts related to psychological contracts theory and the assessment of their transferability to crowdfunding and (2) a list of questions and operational recommendations for every crowdfunding project developer.

Crowdfunding campaigns reflect the personality traits of the entrepreneur, influencing the chances of a successful fundraising. In this study, the authors focus on three different entrepreneurs’ personality dark traits: narcissism, Machiavellianism and psychopathy. Through a text analysis of 338 equity-crowdfunding campaigns in the UK, the authors identified narcissistic expressions used by entrepreneurs in their pitches, and their impact on funding success. The authors found an inverted U-shape relationship between entrepreneurs’ narcissism and the crowdfunding success. On the other hand, entrepreneurs’ psychopathy has a negative linear relationship with crowdfunding success. This study contributes to the entrepreneurship literature, highlighting the importance of displayed entrepreneurs’ personality traits in engaging with crowd investors.

This chapter shows how the theory of industrial organization can help us understand some important aspects of crowdfunding that go beyond the finance sphere of the firm. A special attention is devoted to the role and behavior of crowdfunding platforms, which intermediate between entrepreneurs and contributors.

We are interested in how and why people use or take part to crowdfunding projects.

Over the past four years, we have interviewed over 120 crowdfunding requesters and supporters of over 15 project types from dance to technology to publishing.

The key contributions of this research are: An understanding of the work involved, an understanding of motivations for participation, and an understanding of how the design of platforms influences engagement.

We adopt a computer-supported cooperative work approach from sociology, computer science, and design to provide a new perspective to researchers who seek to understand user behavior, motivations, and the mechanisms in place to support engagement with crowdfunding technology.