The Rise of Crowdfunding
44 Pages Posted: 28 Mar 2022
Date Written: February 24, 2022
Crowdfunding is still a relatively new phenomenon, but it rapidly emerged as an integral part of the entrepreneurial finance landscape. In this paper, I provide an overview the crowdfunding phenomenon. I first describe the crowdfunding process, its actors and markets. Then I outline the dynamics of crowdfunding campaigns and discuss economic mechanisms driving them. I also present the strategies crowdfunding platforms adopt to support campaigns and to ultimately sustain their growth trajectories. In addition, I discuss the advantages that tokenization can bring to crowdfunding. I end this paper with insights into the gains of crowdfunding for entrepreneurship and growth.
Keywords: crowdfunding, peer-to-peer lending, online platforms, campaign dynamics, tokenization, informational externalities, payoff externalities, entrepreneurial finance, real effects
JEL Classification: G23, L26
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