The Rise of Crowdfunding

Abstract

In this paper, I provide an overview of the economic literature on crowdfunding. 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.

Keywords: crowdfunding, peer-to-peer lending, online platforms, campaign dynamics, tokenization, informational externalities, payoff externalities, entrepreneurship

JEL Classification: G23, L26