Crowdfunding has become an additional source of funding for research projects where lack of peer reviewing and capacity to manipulate the fund through empty promises are common practices ( Blanchard and Sabuncu 2016).ĭespite all the buzz around this nascent phenomenon, as Mollick (2014) argues, “even basic academic knowledge of the dynamics of crowdfunding is lacking” (p. Crowdfunding campaigns raise some ethical concerns, such as exposure to fraudulent campaigns, lack of privacy, and abuse of the raised funding ( Snyder, Mathers, and Crooks 2016). Understanding various elements and characteristics of crowdfunding is necessary. The extant literature lacks a cohesive theoretical foundation. Hence, a theoretical foundation for crowdfunding phenomenon is essential. In this paper, we start the process of separating crowdfunding from crowdsourcing and other crowd-based initiatives by discussing in detail the distinctive characteristics of crowdfunding, thus laying the foundation for scholars to approach crowdfunding as a fledgling discipline in its own right.Īs a novel fundraising method, crowdfunding is radically different from the alternatives to finance startups. Some scholars, however, argue that crowdfunding is best understood as a standalone concept ( Brabham 2013), so there is an obvious need to distinguish crowdfunding from other crowd-based concepts. Crowdfunding derives from the concept of crowdsourcing ( Howe 2006), and it is sometimes even considered as a sub-branch of crowdsourcing due to the characteristics shared with other crowd-based initiatives ( Hossain 2015). There are several types of crowdfunding in practice, namely donation-based, equity-based, lending-based and reward-based crowdfunding (Massolution 2012). g., Hollas 2013).Ĭrowdfunding has attracted media coverage and attention from academia, as well as from the traditional stakeholders around the world.

Recently, a vast array of crowdfunding initiatives have successfully received financial backing by directly soliciting private individuals to each pledge, donate, or lend a small sum of money (e. Crowdfunding has emerged as an increasingly popular and viable alternative way of funding a variety of initiatives ( Belleflamme, Lambert & Schwienbacher, 2013 Fraser, Bhaumik & Wright, 2015 Rechtman & O’Callaghan, 2014 Schwienbacher & Larralde, 2012). 2015 Xiang, Worthington, and Higgs 2014). For centuries, attracting outside capital to finance a project or entrepreneurial initiative has mostly depended on the conventional fund providers, such as banks, venture capitalists, government agencies, and foundations ( Cowling et al.

Religious venture definition