Crowdfunding. Overview of the industry, regulation and role of crowdfunding in the venture startup

Master's Thesis , 2014 , 98 Pages , Grade: 5.00/5

Business economics - Company formation, Business Plans

Structured Abstract
(Purpose) This thesis aims to take stock and systemize existing knowledge on crowdfunding while providing overview of the industry, its regulatory environment and advancing the insight into the role of crowdfunding in the startup lifecycle.
(Design/metodology/approach) It is adopting an exploratory and phenomenon-based approach which is deemed appropriate when investigating rather new phenomena. Furthermore, the work combines survey and interview methodologies to assess the opinion and real-world behavior of different stakeholders in crowdfunding marketplace and identify gaps requiring further academic consideration.
(Theoretical Perspective) Grounded in limited theories surrounding crowdfunding as well as adjacent fields such as early stage, informal and angel investment.
(Metodology) Empirical data was gathered using multiple interactive web-based questionnaires distributed to different stakeholders and “informed general public” mainly through the social networks (Linkedin, Facebook and Twitter) and direct solicitation of entrepreneurial associations, networks and online communities. The study relies on both qualitative and quantitative analysis in attempt to find data patterns useful in future research and establish some managerial and policymaker recommendations based on limited evidence collected.
(Originality and practical implications) The work adds value to this field through a 3-fold contribution: Taking a look at crowdfunding through the prism of SWOT analysis of the practice itself and Porter’s 5 forces analysis of crowdfunding platforms industry. Providing evidence in favor of implementing various degrees of regulation based on different crowdfunding categories, using the Italian case of equity-based crowdfunding regulation as a model. Finally, it yields some interesting findings on relevance of crowdfunding in the venture startup while pointing out key motivators which make entrepreneurs consider this fundraising option. In addition, related policymaker/managerial implications are exposed and academic literature updated with reference to contemporary developments in this dynamic field.
Keywords: crowdfunding, industry overview, regulation, role, dynamics
Paper type: MSc thesis

Inhaltsverzeichnis

• Structured Abstract
• Index
• Introduction
• Part I
  • What is crowdfunding?
  • Position of crowdfunding inside the entrepreneurial equity "food" chain and how crowdfunding differs from angel/VC funding.
  • Main actors in crowdfunding space
  • Crowdfunding taxonomy and crowdfund investing ecosystem
  • Literature review and principal research streams
    • General exploratory research
    • Who gets crowdfunded?
    • Regulation and policy
    • Dynamics of the crowdfunding process
    • The geography of crowdfunding
    • Common points and research gaps
    • Five forces that shape the crowdfunding industry
    • Market overview and SWOT analysis of crowdfunding
• Part II
  • USA
  • Criticism
  • Italy
  • Is the Italian approach truly in line with expectations of market participants and the general public?
  • Other European countries and the future of Paneuropean regulation
  • Policymaker suggestions on crowdfunding issues
• Part III
  • Theoretical framework and grounding
  • Research questions
  • Research method and design
  • Data collection and empirical setting
• Quantitative Findings
  • Descriptive results
  • Empirical patterns and relationships
  • Evidence in consensus analysis
• Qualitative findings
  • Qualitative findings obtained from questionnaires
  • Expert interviews
  • Business angels and equity crowdfunding (cases)
• Conclusions
• Managerial and policymaker implications
• Limitations and suggestions for future research
• References
• Appendices
  • Appendix 1: Matrix of key provisions of SEC regulations promulgated or proposed
  • Appendix 2: Cases of crowdfunding platforms supported by business angels
  • Appendix 3: Survey 1
  • Appendix 4: Survey 2
  • Appendix 5: Cross-tabulation between the fear factors (i.e. disadvantages) of crowdfunding and funding sources employed so far during the seed/startup stage (Survey 2)
  • Appendix 6: Cross-tabulation between funding sources used in the past and those projected to be used in the future (Survey 2)
  • Appendix 7: Variable dictionary for Survey 2 dataset
  • Appendix 8: Correlation matrix related to Survey 2 dataset
  • Appendix 9: Regression analysis models (Survey 2)

Zielsetzung und Themenschwerpunkte

This thesis aims to provide a comprehensive overview of the crowdfunding industry, its regulatory environment, and the role of crowdfunding in the startup lifecycle. It adopts an exploratory and phenomenon-based approach to investigate this relatively new phenomenon. The study combines survey and interview methodologies to assess the opinions and real-world behavior of different stakeholders in the crowdfunding marketplace and identify gaps requiring further academic consideration.

• The role of crowdfunding in the startup lifecycle
• The regulatory environment of crowdfunding
• The dynamics of the crowdfunding process
• The impact of crowdfunding on the venture capital industry
• The future of crowdfunding and its potential for growth

Zusammenfassung der Kapitel

The first part of the thesis provides a comprehensive definition of crowdfunding, its place in the entrepreneurial equity "food" chain, and an overview of the key elements of the crowdfunding ecosystem. It also presents various models of crowdfunding in detail, along with a comprehensive literature review on existing academic work in this field. The chapter concludes with an analysis of crowdfunding portals, biases, conflicts of interest, and liability issues. It also provides recent data on the size of the crowdfunding market and its major players, accompanied by a SWOT and Porter analysis of the industry.

The second part of the thesis discusses the risks of crowdfunding and the current regulatory framework in major economies, such as the USA, EEA, and Italy. It critically analyzes current legislation and draws conclusions that serve as a foundation for policymaker recommendations presented in Part III.

The third part of the thesis opens with general observations about the VC industry and traditional sources of funding, placing crowdfunding in this perspective and arguing how and why crowdfunding can be either complementary or a substitute for more traditional investors. The main research question, whether crowdfunding can serve as a pillar in venture startup, is introduced, along with the description and reasoning behind the methodologies used. Case studies are presented, along with the results of a custom-made survey and expert interviews. The results are then discussed, along with policymaker suggestions and managerial implications that emerged during the research.

Schlüsselwörter

The key words and focus themes of the text include crowdfunding, industry overview, regulation, role, and dynamics. The thesis explores the various aspects of crowdfunding, including its regulatory environment, its role in the startup lifecycle, and its impact on the venture capital industry. It also examines the dynamics of the crowdfunding process and the future of crowdfunding and its potential for growth.

• Grade: 5.00/5
• Author: I. M. (Author)
• Publication Year: 2014
• Pages: 98
• Catalog Number: V285390
• ISBN (eBook): 9783656855088
• ISBN (Book): 9783656855095
• Language: English
• Tags: crowdfunding, venture startup, crowdfunding industry, crowdfunding dynamics, crowdfunding regulation