Crowdfunding has fundamentally impacted the world of entrepreneurial finance by providing a new alternative to equity, debt and bootstrapping which allows entrepreneurs to leverage 'the crowd’ in order to generate financial investment and further ‘value-added’ benefits (Belleflamme et al., 2014; Harrison, 2013; Ordanini et al., 2011) generating £2.7 billion of investment in 2012 (Massolution, 2013). While research has begun to develop understanding of the phenomenon, this has tended to focus on the dynamics of investment platform activity, rather than the experiences of the entrepreneurs who engage in this activity. This paper empirically investigate the perceptions of benefits by early-stage entrepreneurs involved in one of the most common forms of crowdfunding; reward-based. Through thematic analysis of interviews with a pilot sample of 2 experts and 5 early-stage entrepreneurs, benefits were identified, explored and contrasted with the literature and an existing conceptual framework before being explained. This resulted in a new empirically contextualised ‘benefits’ conceptual framework. Some of the anticipated benefits in the literature including overcoming finance difficulties and providing a basis for future finance were supported. Whilst the literature emphasises democratic investor involvement through financing decisions, the results of interviews indicated that investor involvement was more wide ranging and diverse, from simple investment to continuous engagement in the development of the business, supporting an understanding of how democratic involvement of the ‘crowd’ actually occurs. Furthermore, a number of drawbacks to crowdfunding are identified, such as the onerous time commitments of engaging in crowdfunding. Overall, the approach of each entrepreneur, their engagement with investors and the benefits they realised was found to be influenced by their personal ambitions and approach. The empirically informed framework of benefits in crowdfunding from this study fills a gap in crowdfunding research and provides the basis for new enquiries. This adds value by illustrating the potential of crowdfunding research to go beyond a concern with platform activity to a better understanding of the impact on small business development and entrepreneurial learning when deciding on funding sources. The paper highlights that the issues relating to crowdfunding go beyond simple access to project finance to seeing crowdfunding as one aspect of a broader resource development strategy for early-stage projects. Furthermore, it illustrates how the entrepreneurs’ own ambitions and approaches to venture development inform how they engage with crowdfunding investors. Finally, the framework suggests that the concept of democratic ‘crowd’ involvement may go beyond platform investment dynamics, through beginning to outline the process through which a new form of community stakeholder engagement in early-stage projects may be emerging. As a pilot study there is an opportunity to develop this study further by conducting international cross-case analysis to further refine and contextualise the benefits framework and extend through further exploring the issues identified.
CORE (COnnecting REpositories)
CORE (COnnecting REpositories)