IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v13y2020i4p81-d349009.html
   My bibliography  Save this article

Crowdfunding: An Exploratory Study on Knowledge, Benefits and Barriers Perceived by Young Potential Entrepreneurs

Author

Listed:
  • Susana Bernardino

    (CEOS.PP—Centre for Organisational and Social Studies of P.Porto, Polytechnic Institute of Porto, 4465-004 Porto, Portugal
    Institute of Accounting and Administration (ISCAP), Polytechnic Institute of Porto, 4465-004 Porto, Portugal)

  • J. Freitas Santos

    (CEOS.PP—Centre for Organisational and Social Studies of P.Porto, Polytechnic Institute of Porto, 4465-004 Porto, Portugal
    Institute of Accounting and Administration (ISCAP), Polytechnic Institute of Porto, 4465-004 Porto, Portugal)

Abstract

Crowdfunding (CF) has experienced impressive growth in recent years with the development of internet and information technologies that increased the participation of the “crowd” to fund entrepreneurial projects. Young entrepreneurs, especially well-qualified students, have recently begun to play a new role in the economy by launching new ventures in niche markets. The aim of the present paper is to provide a deeper understanding of CF among Portuguese young potential entrepreneurs as an alternative funding mechanism, by discussing its main characteristics and the perceived benefits and barriers that might drive young entrepreneurs to post a project on a CF platform or discourage its use. Through an online survey, we query well-qualified students about the knowledge they have about crowdfunding and benefits and barriers that can increase or reduce the possibility of funding to launch a new venture. The results show that potential young entrepreneurs have moderate knowledge about CF. Consequently, they are not able to explore all the business models available, specifically the models related to investment (lending and equity). The respondents perceive several benefits of the use of CF that go beyond the financial advantages, such as the communication of the project to a wider audience and the additional feedback from potential customers. The perceived barriers that could deter the use of CF are related to the implementation of the CF campaign, although contextual constraints have been mentioned.

Suggested Citation

  • Susana Bernardino & J. Freitas Santos, 2020. "Crowdfunding: An Exploratory Study on Knowledge, Benefits and Barriers Perceived by Young Potential Entrepreneurs," JRFM, MDPI, vol. 13(4), pages 1-24, April.
    • Handle: RePEc:gam:jjrfmx:v:13:y:2020:i:4:p:81-:d:349009
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/13/4/81/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/13/4/81/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Guo, Yanhong & Zhou, Wenjun & Luo, Chunyu & Liu, Chuanren & Xiong, Hui, 2016. "Instance-based credit risk assessment for investment decisions in P2P lending," European Journal of Operational Research, Elsevier, vol. 249(2), pages 417-426.
    2. Belleflamme, Paul & Omrani, Nessrine & Peitz, Martin, 2015. "The economics of crowdfunding platforms," Information Economics and Policy, Elsevier, vol. 33(C), pages 11-28.
    3. Mi (Jamie) Zhou & Baozhou Lu & Weiguo (Patrick) Fan & G. Alan Wang, 2018. "Project description and crowdfunding success: an exploratory study," Information Systems Frontiers, Springer, vol. 20(2), pages 259-274, April.
    4. Jörn Block & Lars Hornuf & Alexandra Moritz, 2018. "Which updates during an equity crowdfunding campaign increase crowd participation?," Small Business Economics, Springer, vol. 50(1), pages 3-27, January.
    5. Ajay Agrawal & Christian Catalini & Avi Goldfarb, 2015. "Crowdfunding: Geography, Social Networks, and the Timing of Investment Decisions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(2), pages 253-274, June.
    6. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
    7. Matthieu Chemin & Joost de Laat, 2013. "Can Warm Glow Alleviate Credit Market Failures? Evidence from Online Peer-to-Peer Lenders," Economic Development and Cultural Change, University of Chicago Press, vol. 61(4), pages 825-858.
    8. Paschen, Jeannette, 2017. "Choose wisely: Crowdfunding through the stages of the startup life cycle," Business Horizons, Elsevier, vol. 60(2), pages 179-188.
    9. Alexandra Moritz & Joern H. Block, 2016. "Crowdfunding: A Literature Review and Research Directions," FGF Studies in Small Business and Entrepreneurship, in: Dennis Brüntje & Oliver Gajda (ed.), Crowdfunding in Europe, edition 1, pages 25-53, Springer.
    10. Gerrit K.C. Ahlers & Douglas Cumming & Christina Günther & Denis Schweizer, 2015. "Signaling in Equity Crowdfunding," Entrepreneurship Theory and Practice, , vol. 39(4), pages 955-980, July.
    11. Grazia Cecere & Fabrice Le Guel & Fabrice Rochelandet, 2017. "Crowdfunding and social influence: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 49(57), pages 5802-5813, December.
    12. Othmar M. Lehner, 2013. "Crowdfunding social ventures: a model and research agenda," Venture Capital, Taylor & Francis Journals, vol. 15(4), pages 289-311, October.
    13. Grazia Cecere & Fabrice Le Guel & Fabrice Rochelandet, 2017. "Crowdfunding and social influence: an empirical investigation," Post-Print hal-01610943, HAL.
    14. Mi (Jamie) Zhou & Baozhou Lu & Weiguo (Patrick) Fan & G. Alan Wang, 0. "Project description and crowdfunding success: an exploratory study," Information Systems Frontiers, Springer, vol. 0, pages 1-16.
    15. Jascha-Alexander Koch & Michael Siering, 2019. "The recipe of successful crowdfunding campaigns," Electronic Markets, Springer;IIM University of St. Gallen, vol. 29(4), pages 661-679, December.
    16. Viotto da Cruz, Jordana, 2018. "Beyond financing: crowdfunding as an informational mechanism," Journal of Business Venturing, Elsevier, vol. 33(3), pages 371-393.
    17. Jan Janku & Zuzana Kucerova, 2018. "Successful Crowdfunding Campaigns: The Role of Project Specifics, Competition and Founders’ Experience," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 68(4), pages 351-373, September.
    18. Gordon Burtch & Anindya Ghose & Sunil Wattal, 2013. "An Empirical Examination of the Antecedents and Consequences of Contribution Patterns in Crowd-Funded Markets," Information Systems Research, INFORMS, vol. 24(3), pages 499-519, September.
    19. Allison, Thomas H. & McKenny, Aaron F. & Short, Jeremy C., 2013. "The effect of entrepreneurial rhetoric on microlending investment: An examination of the warm-glow effect," Journal of Business Venturing, Elsevier, vol. 28(6), pages 690-707.
    20. Yu, Sandy & Johnson, Scott & Lai, Chiayu & Cricelli, Antonio & Fleming, Lee, 2017. "Crowdfunding and regional entrepreneurial investment: an application of the CrowdBerkeley database," Research Policy, Elsevier, vol. 46(10), pages 1723-1737.
    21. Kévin André & Sylvain Bureau & Arthur Gautier & Olivier Rubel, 2017. "Beyond the Opposition Between Altruism and Self-interest: Reciprocal Giving in Reward-Based Crowdfunding," Journal of Business Ethics, Springer, vol. 146(2), pages 313-332, December.
    22. Kuppuswamy, Venkat & Bayus, Barry L., 2017. "Does my contribution to your crowdfunding project matter?," Journal of Business Venturing, Elsevier, vol. 32(1), pages 72-89.
    23. Christopher Courtney & Supradeep Dutta & Yong Li, 2017. "Resolving Information Asymmetry: Signaling, Endorsement, and Crowdfunding Success," Entrepreneurship Theory and Practice, , vol. 41(2), pages 265-290, March.
    24. Grazia Cecere & Fabrice Le Guel & Fabrice Rochelandet, 2017. "Crowdfunding and social influence: an empirical investigation," Grenoble Ecole de Management (Post-Print) hal-01610943, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anton Miglo, 2022. "Crowdfunding and bank financing: substitutes or complements?," Small Business Economics, Springer, vol. 59(3), pages 1115-1142, October.
    2. Kanayo Ogwu & Patrick Hickey & Okeoma John-Paul Okeke & Adnan ul Haque & Elias Pimenidis & Eugene Kozlovski, 2022. "An Integrated Online/Offline Social Network-Based Model for Crowdfunding Support in Developing Countries: The Case of Nigeria," Sustainability, MDPI, vol. 14(15), pages 1-21, July.
    3. Bruno Torres & Zélia Serrasqueiro & Márcio Oliveira, 2024. "Portugal’s Crowdfunding: A Systematic Literature Review," JRFM, MDPI, vol. 17(1), pages 1-32, January.
    4. Etienne Schraven & Elco van Burg & Marco van Gelderen & Enno Masurel, 2020. "Predictions of Crowdfunding Campaign Success: The Influence of First Impressions on Accuracy and Positivity," JRFM, MDPI, vol. 13(12), pages 1-16, December.
    5. Ali Saleh Alshebami, 2022. "Crowdfunding Platforms as a Substitute Financing Source for Young Saudi Entrepreneurs: Empirical Evidence," SAGE Open, , vol. 12(3), pages 21582440221, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bernardino, Susana & Freitas Santos, José & Oliveira, Sílvie, 2021. "The impact of social media and e-WOM on the success of reward-based crowdfunding campaigns," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    2. Messeni Petruzzelli, Antonio & Natalicchio, Angelo & Panniello, Umberto & Roma, Paolo, 2019. "Understanding the crowdfunding phenomenon and its implications for sustainability," Technological Forecasting and Social Change, Elsevier, vol. 141(C), pages 138-148.
    3. Boudreau, Kevin J. & Jeppesen, Lars Bo & Reichstein, Toke & Rullani, Francesco, 2021. "Crowdfunding as Donations to Entrepreneurial Firms," Research Policy, Elsevier, vol. 50(7).
    4. Thomas Clauss & Thomas Niemand & Sascha Kraus & Patrick Schnetzer & Alexander Brem, 2019. "Increasing Crowdfunding Success Through Social Media: The Importance Of Reach And Utilisation In Reward-Based Crowdfunding," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 1-30, May.
    5. Christian Handke & Carolina Dalla Chiesa, 2022. "The art of crowdfunding arts and innovation: the cultural economic perspective," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(2), pages 249-284, June.
    6. Bagheri, Afsaneh & Chitsazan, Hasti & Ebrahimi, Ashkan, 2019. "Crowdfunding motivations: A focus on donors' perspectives," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 218-232.
    7. Lingfei Deng & Qiang Ye & DaPeng Xu & Wenjun Sun & Guangxin Jiang, 2022. "A literature review and integrated framework for the determinants of crowdfunding success," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-70, December.
    8. Penz, R. Frederic & Hörisch, Jacob & Tenner, Isabell, 2022. "Investors in environmental ventures want good money—and a clean conscience: How framing, interest rates, and the environmental impact of crowdlending projects influence funding decisions," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    9. Fabrice Hervé & Armin Schwienbacher, 2018. "Crowdfunding And Innovation," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1514-1530, December.
    10. Chan, Ho Fai & Moy, Naomi & Schaffner, Markus & Torgler, Benno, 2021. "The effects of money saliency and sustainability orientation on reward based crowdfunding success," Journal of Business Research, Elsevier, vol. 125(C), pages 443-455.
    11. Nguyen, Loan T.Q. & Hoang, Thinh G. & Do, Linh H. & Ngo, Xuan T. & Nguyen, Phuong H.T. & Nguyen, Giang D.L. & Nguyen, Giang N.T., 2021. "The role of blockchain technology-based social crowdfunding in advancing social value creation," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
    12. Hörisch, Jacob & Tenner, Isabell, 2020. "How environmental and social orientations influence the funding success of investment-based crowdfunding: The mediating role of the number of funders and the average funding amount," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    13. Felipe, Israel José dos Santos & Mendes-Da-Silva, Wesley & Leal, Cristiana Cerqueira & Braun Santos, Danilo, 2022. "Reward crowdfunding campaigns: Time-to-success analysis," Journal of Business Research, Elsevier, vol. 138(C), pages 214-228.
    14. Cai, Wanxiang & Polzin, Friedemann & Stam, Erik, 2021. "Crowdfunding and social capital: A systematic review using a dynamic perspective," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    15. Xiaobei Liang & Xiaojuan Hu & Jiang Jiang, 2020. "Research on the Effects of Information Description on Crowdfunding Success within a Sustainable Economy—The Perspective of Information Communication," Sustainability, MDPI, vol. 12(2), pages 1-36, January.
    16. John P. Berns & Maria Figueroa-Armijos & Serge P. da Motta Veiga & Timothy C. Dunne, 2020. "Dynamics of Lending-Based Prosocial Crowdfunding: Using a Social Responsibility Lens," Journal of Business Ethics, Springer, vol. 161(1), pages 169-185, January.
    17. Samuel Ribeiro-Navarrete & Juan Piñeiro-Chousa & M. Ángeles López-Cabarcos & Daniel Palacios-Marqués, 2022. "Crowdlending: mapping the core literature and research frontiers," Review of Managerial Science, Springer, vol. 16(8), pages 2381-2411, November.
    18. Yang Zhao & Xuemei Xie & Liuyong Yang, 0. "Female entrepreneurs and equity crowdfunding: the consequential roles of lead investors and venture stages," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-29.
    19. Yang Zhao & Xuemei Xie & Liuyong Yang, 2021. "Female entrepreneurs and equity crowdfunding: the consequential roles of lead investors and venture stages," International Entrepreneurship and Management Journal, Springer, vol. 17(3), pages 1183-1211, September.
    20. Berns, John P. & Jia, Yankun & Gondo, Maria, 2022. "Crowdfunding success in sustainability-oriented projects: An exploratory examination of the crowdfunding of 3D printers," Technology in Society, Elsevier, vol. 71(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:13:y:2020:i:4:p:81-:d:349009. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.