Crowdfunding is the practice of seeking support from a large number of backers, each funding a small amount, in order to reach a specific funding goal. This monograph examines: (1) the field of crowdfunding, (2) how it has evolved, (3) the impact crowdfunding has on the fields of innovation, marketing and finance and (4) the factors that can affect crowdfunding outcomes.
We view crowdfunding as complementary and transformative, increasing the efficiency of several existing processes such as idea generation and testing, fund raising and collection. We combine practitioner perspectives and research findings to provide insights on this subject. We explore the crowdfunding ecosystem and the role that project creators, backers and the platform play in the entire crowdfunding process.
We provide a comprehensive review of current academic research in crowdfunding that focus on three key components of the crowdfunding process: (1) project design and description, (2) project creator and backer characteristics and (3) platform design and architecture, and explore how different properties of these crowdfunding components impact the crowdfunding process and affect crowdfunding outcomes.
We further provide an overview of new developments in crowdfunding (such as new crowdfunding models) and suggest trends (such as privacy issues) that may shape the crowdfunding ecosystem in the future.
Crowdfunding has become an important aspect of society today. It has been said to have supplanted traditional financial institutions and has given new life to ventures. The intent of this monograph is to allow you to understand crowdfunding in its current context, how it is affecting society, how it functions, and factors that can impact successful interactions between the crowdfunding project creator and the people who fund these projects.
Section 1 details how crowdfunding first came about and how it has evolved over time, including the key participants of crowdfunding and how crowdfunding as a concept has grown and changed since its inception. Section 2 discusses an important question that the crowdfunding industry has been asking: whether crowdfunding is disruptive to traditional financial institutions or whether it transforms the entire financial intermediary field. As crowdfunding is a broad term used to describe multiple models of crowdfunding, section 3 presents the four common models of crowdfunding: donation, reward, equity, and loans.
There are three main players in the crowdfunding process: the project creator, the backer, and the platform. Factors that can affect crowdfunding can be categorized under three main classes: (1) factors that are specific to the crowdfunding users, namely the project creators and backers; (2) factors found within the crowdfunding campaign page itself; and (3) factors built into the platform design and policies. Sections 4, 5, and 6 explore how some of these factors have an impact on crowdfunding outcomes. Finally, the monograph ends with a discussion of how crowdfunding may be progressing, with a few nascent models entering the crowdfunding sphere as well as how the impact of new technology can affect crowdfunding. Since crowdfunding has become mainstream, there have been multiple cases of fraud and other ethical issues that have arisen as well. We wrap up by delivering views on multiple issues on ethics, responsibility and decision agency in crowdfunding.