Crowdfunding small businesses and startups: A systematic review, an appraisal
of theoretical insights and future research directions
By Mark Anthony Camilleri1 2 and Stefano Bresciani3
This is a prepublication version.
Suggested citation: Camilleri, M.A. & Bresciani, S. (2022). Crowdfunding small businesses and startups: A systematic
review, an appraisal of theoretical insights and future research directions, European Journal of Innovation Management,
This contribution aims to evaluate key theoretical bases that were used in previous research, to investigate the
use of crowdfunding platforms by small businesses and startups. It presents the findings from a systematic
review to better explain the pros and cons of utilizing these disruptive technologies for crowdsourcing and/or
The researchers adopt the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA)
methodical protocol to search, screen, extract and scrutinize seventy-two (72) articles that were indexed in
both Scopus and Web of Science. They examine their research questions, describe their methodologies.
Afterwards, they synthesize the findings from previous literature, outline implications and discuss about
future research avenues.
A thorough review of the relevant literature suggests that there are opportunities as well as challenges for
project initiators as well as for crowd-investors, if they are considering equity crowdfunding, peer-to-peer
(P2P) lending and rewards-based crowdfunding platforms, among others, to raise awareness about their
projects and to access finance from crowd-investors.
Further research is required on this timely topic. There are a number of theories relating to technology
adoption and/or innovation management, strategic management, accounting and financial reporting, and
normative/business ethics, among other research areas, that can be utilized as theoretical bases, to explore this
Crowd-investors are striving in their endeavors to find a trade-off between risks and rewards associated with
Currently, there are few systematic reviews and conceptual articles focused on the crowdfunding of small
businesses and startups. Hence this contribution closes this gap in the academic literature. Moreover, it links
the extant theory to practice. It clarifies that the resource-based view theory of the firm, the theory of planned
behavior, the diffusion of innovations theory as well as the signaling theory, among other conceptual
frameworks, can be used to investigate different facets of crowdsourcing and crowd-investing.
Keywords: crowdfunding; crowd sourcing; crowd-investing; resource-based view, diffusion of innovations, signaling
1 Department of Corporate Communication, Faculty of Media and Knowledge Sciences, University of Malta, Malta. Email:
2 The Business School, University of Edinburgh, Scotland.
3 Department of Management, University of Turin, Italy.
Crowdfunding is an alternative method of raising funds that is independent from financial
institutions. Individual entrepreneurs, startups and established businesses can utilize online
crowdfunding platforms to access finance for new ventures or existing projects, from a large number
of investors, in return for products or equity stakes (Belleflamme et al., 2015; Camilleri, 2021a;
Mollick, 2014; Troise and Tani, 2020). Project initiators would usually specify their financing goals
and set time frames with deadlines, for their crowdfunding campaigns. If the pre-set funding goal is
not met, they will not garner any funds for their project.
The fund-raising campaigns have to appeal to as many investors as possible. Hence, initiators
ought to feature engaging content, including texts, images, photos, videos, and the like, to lure
investors to support their innovative ideas, startups or business ventures. They can launch fundraising
campaigns through various crowdfunding platforms, in different markets, to connect with online users,
thereby circumventing traditional financial institutions like banks, venture capitalists and business
angels. The crowdfunding websites are “disintermediating" traditional distribution channels by
connecting online users directly with project initiators (Vismara, 2016). They serve as "network
orchestrators" as they curate the offerings they receive (Bruton, Khavul, Siegel and Wright, 2015;
Vrontis, Christofi, Battisti and Graziano, 2020). More individuals and organizations are turning to
crowdfunding sources to raise funds for business ventures, artistic or creative projects and for medical
expenses, among other purposes. Alternatively, they use them to donate financial resources to cause-
related, socially and environmentally responsible projects.
The crowd-investors would usually put their money in those projects in which they believe or
hold lucrative potential. They may be considered as shareholders if they provide capital finance,
thereby contributing to the development and growth of crowdfunded projects. There are various
motivations that could attract individuals or groups to pledge their support to equity crowdfunding
campaigns (Belleflamme et al., 2014; Bonini, and Capizzi, 2019; Hornuf and Schwienbacher, 2018),
peer-to-peer (P2P) lending/lending crowdfunding (Boylan et al., 2018; Polena and Regner, 2018), and
to debt-securities crowdfunding (Boylan et al., 2018; Cox and Nguyen, 2018; Gan et al., 2021;
Subramanian, 2020), among other crowdfunding products.
Prospective investors might be willing to be involved in the development and success of
entrepreneurial projects including startups (Di Pietro et al., 2018; Eiteneyer et al., 2019; Oliva et al.,
2019; Paschen, 2017). They may be seeking a return on investment for their monetary contributions,
particularly if they believe that project initiators could deliver exceptional service quality and/or are
in a position to develop new technological innovations and cutting-edge products (Del Giudice et al.,
2021; Troise et al., 2021). Hence, they will usually trust and have faith in the investees’ knowledge
and capabilities, to foster positive change in business and society.
In this light, the researchers link key theoretical underpinnings relating to social capital (Groza
et al., 2020; Lin and Wang, 2021; Rezaei et al., 2020; Troise et al., 2020); Yang and Koh, 2022; Zheng
et al., 2014), stakeholder engagement (Camilleri, 2022; Freeman, 1984; Valančienė and Jegelevičiūtė
2014), resource based view (RBV) (Barney, 1986; Lagazio and Querci, 2018; Wernerfelt, 1984;
Mitrega et al., 2021), technology adoption (Ajzen, 1991; Davis, 1989; Rahman et al., 2020; Shneor
and Munim, 2019) and to the diffusion of innovations (Bento et al., 2019; Presenza et al., 2019;
Rogers, 2003; Yang and Lee, 2019; Yang et al., 2016), among others, to better explain the acceptance
and use of disruptive crowdfunding platforms among different stakeholders, including project
initiators as well as crowd-investors.
A systematic research methodology was used to capture, analyze and synthesize previous
research on crowdfunding of small businesses and startups. The authors discuss about the pros / cons
of crowdfunding products and elaborate on the demand for / supply of crowdfunding investments.
Their argumentation is based on key theoretical insights including those related to the resource-based
view, the theory of planned behavior as well as on the diffusion of innovation, among other models.
Afterwards, they clarify the implications of their contribution, and put forward future research avenues
2. Theoretical insights
Previous research confirmed that crowdfunding has become a very popular field of study
across different disciplines including finance, innovation management, information technology, and
marketing, among other social sciences, in the past decade. Many researchers relied on different
paradigms to explore this topic in depth and breadth. Table 1 features some of the most popular
theories that were used to shed light on the use of crowdfunding as an alternative strategy to raise
finance (from online sources).
Table 1. Key concepts and theoretical underpinnings that guided researchers of crowdfunding
The credit rationing theory suggests that the
providers of finance may limit credit to
borrowers if they perceive that their projects
The decision-making theory maintains that
individuals ought to behave in a rational
manner in risky and uncertain conditions. It
posits that the decision-making processes
should be based on the adoption and
application of logical choices.
(Hoegen et al., 2018).
The diffusion of innovations theory seeks to
explain how, why, and at what rate
(Bento et al., 2019; Presenza
, 2019; Rogers, 2003;
new ideas and technology spread. Diffusion is
the process by which an innovation is
communicated over time, among the
participants in a social system.
Yang and Lee, 2019; Yang
et al., 2016).
The flexibility theory suggests that firms
preserve debt capacity or hold back on issuing
debt because they want to maintain flexibility.
This theory maintains that firms with a lot of
potential investment and growth opportunities
have a lower debt/equity ratio.
The game theory is intended to conceive
optimal decisions in a competitive
environment. It provides tools that are used to
analyze situations in which parties, called
players, make decisions that are
(Jiménez-Jiménez et al.,
The goal attainment theory includes a human
process of interactions that can lead to
transactions and to the attainment of goals (and
(Li et al., 2019).
The human capital theory suggests that
organizations should invest in their employees'
attributes, knowledge, skills and competences
that are considered useful to improve the
quality of their production processes.
(Hornuf et al., 2018).
The pecking order theory (also known as the
dominance hierarchy theory) suggests that
there is a hierarchy or relative rankings, among
(Lin and Wang, 2021).
The regulatory focus theory describes how
people engage in self-regulation to achieve
their goals. This theory implies that individuals
adopt a promotion focus (to attain desired
outcomes), or a prevention focus (to avoid
(Higgins, 1998; Shahab et
The resource-based view theory (RBV)
suggests that the firms' performance is
determined by the resources at their disposal.
The way they use their resources could enable
them to outperform their rivals, and to achieve
a competitive advantage.
(Barney, 1986; Lagazio and
Querci, 2018; Wernerfelt,
The signaling theory is focused on the
communications among two or more parties
(individuals or groups). It posits that one of the
parties, conveys information (i.e. a signal) to
the other parties (i.e. the receivers of the
message), who must choose how to interpret
that are conveyed to them
(Connelly et al., 2011;
Kleinert et al., 2020; Lim
and Busenitz, 2020;
Reichenbach and Walther,
The social capital theory suggests that social
networks lead to significant benefits to a
society. This theory clarifies that businesses
can improve their performance by building
strategic alliances and by improving
relationships with stakeholders.
(Coleman, 1988; Groza et
al., 2020; Zheng et al.,
The social exchange theory presumes that two
individuals or organizations would be willing
to engage in mutually beneficial relationships.
This theory suggests that these relationships
would usually be based on frequent exchanges
of resources or goods, that are supposed to add
value to each party.
(Yang and Koh, 2022).
The social responsibility theory suggests that
everyone have a responsibility to bear in
society. This normative theory posits that
individuals and/or organizations are
accountable to fulfill their duties and
responsibilities. It clarifies that their actions
ought to benefit the welfare of society and the
(Berns et al., 2020;
The stakeholder theory seeks to define the
organizations' relationships with different
stakeholders including employees, suppliers,
local communities, creditors, and regulatory
authorities, among others. This social theory
builds on the resource-based view of the firm,
market-based view as well as on relevant
normative theories relating to ethical
(Camilleri, 2019b; Freeman,
1984; Troise and Camilleri,
2021; Valančienė and
responsibility, that address social issues in
Status quo bias
The status quo bias theory suggests that
individuals, groups and organizations tend to
prefer the current state of affairs, as they are
averse to change. The status quo cognitive bias
(Yang and Lee, 2019).
The stereotype content theory postulates that
individuals are predisposed to assess other
persons and groups based on their feelings of
trust, connection and warmth. Alternatively,
their opinions about others can be based on
their impressions of skills, intelligence or
(Johnson et al., 2018).
The technology acceptance model (TAM)
presumes that the individuals' perceived ease
of use and their perceived usefulness of
technologies are two factors that can determine
their intentions to use them.
(Davis, 1989; Rahman et al.,
The theory of planned behavior (TPB) builds
on the theory of reasoned action. It posits that
three factors, namely, attitudes toward
behaviors, subjective norms (social
influences), and perceived behavioral control
influence the individuals' intentions to perform
(including using technologies)
(Ajzen, 1991; Rahman et al.,
2020; Shneor and Munim,
The theory of reasoned action (TRA) suggests
that the individuals' behaviors are determined
by their intentions to perform behaviors and
that these intentions are, in turn, affected by
their attitudes toward the behaviors as well as
by the subjective norms (social influences) that
are imposed by
(Fishbein and Ajzen, 1975;
Rahman et al., 2020)
Unified theory of
use of technology
The unified theory of acceptance and use of
technology (UTAUT) is a technology
acceptance model presumes that the
individuals’ performance expectancy, effort
expectancy, social influences, and facilitating
conditions, would have an effect on their
intentions to use technology.
(Bakri et al., 2021;
Venkatesh et al., 2003).
The venture quality theory posits that ventures
(and investment opportunities) can be
evaluated according to specific signals or
attributes (like financial potential, intellectual
property, partnerships, associated individuals,
and the management team). These factors are
some of the elements that could induce
investors to commit financial resources in an
equity crowdfunding context.
(Kim and Hall, 2020).
The word-of-mouth theory refers to oral
communications (about their experiences with
products and/or services), between two or
(Kim and Hall, 2020).
The researchers relied on a grounded theory approach (Charmaz, 2014), to capture and analyze
data, that was retrieved through a systematic review from reliable sources. They followed PRISMA’s
robust, 4-stage protocol to search, screen, extract and synthesize the findings from previous
contributions that were indexed in Scopus’ and in Web of Sciences’ SSCI and SCI-EXPANDED, as
shown in Figure 1. The bibliographic analysis was carefully planned and documented in all stages, to
ensure accountability, integrity, and transparency. PRISMA ensured that the data collection and the
analyses were rigorous and trustworthy (Paschou et al., 2020).
Figure 1. A PRISMA protocol for systematic analysis
The systematic review considered publications that featured "crowdfunding" AND "small
business(es)" OR “startup(s)" in their title, abstract and keywords. The search query was carried out
through Scopus’ and Web of Science’s repositories. It considered the total number of publications that
were written in English, from January 2017 up to December 2021. Scopus as well as Web of Science
featured a list of contributing authors, identified their articles’ subject areas and keywords. Moreover,
Records identified through
Removal of duplicated records
Screening of records Exclusion of records
Evaluation of full-text articles
Exclusion of full-text articles Extraction of full-text articles
Identification and categorization of the themes of research
Integration and synthesis of the articles’ content
Records identified through
Web of Science’s (SSCI and
they sorted them from highest to lowest number of citations. These two repositories distinguished
between different publication stages, document types and source titles.
Empirical and theoretical/conceptual articles that were published in peer-reviewed journals were
considered as eligible publications for this systematic review. The chosen list included only
contributions that were indexed in Scopus and Web of Science’s core collections in Emerging Sources
Citations Index (ESCI), Science Expanded (SCI-EXPANDED) and Social Sciences Citations Index
(SSCI). The researchers avoided the duplication of results from Scopus and Web of Sciences. Their
search query excluded publications that were featured in books, book series, conference proceedings
and trade publications from this review exercise. Table 2 summarizes the search criteria:
Table 2. Inclusion and exclusion criteria for the systematic review
Search Criterion Inclusion Exclusion
Repository SCOPUS and Web of
Publication type Articles, including
(conceptual, content analyses,
Books, Book series, Chapters,
Date 2017-2021 (5 years).
Language English. Other languages.
The query yielded 213 document results in Scopus and 252 publications in Web of Science’s
repositories. These results were narrowed down to 107 documents in Scopus and to 140 documents in
Web of Science, when the search was limited to journal articles and reviews, that were published in
English, during the past five years (i.e., from January 2017 to December 2021).
According to Scopus, the top 10 subject areas of these articles were related to: Business,
Management and Accounting (64); Economics, Econometrics and Finance (43); Social Sciences (27);
Decision Sciences (10); Computer Science (9); Engineering (8); Environmental Science (5);
Mathematics (4); Energy (3); and Psychology (2).
Web of Science indicated that the most researched areas were associated with Business
Economics (89); Science Technology and Other Topics (18); Engineering (10); Environmental
Sciences and Ecology (10); Computer Science (9); Information Science and Library Science (6);
Communication (5); Government Law (4); Operations Research and Management Science (4); and
There were 72 (out of 107 publications in Scopus) that were also included in Web of Sciences’
repositories. 44 were featured within the Social Sciences Citation Index (SSCI), 21 were in Emerging
Sources Citation Index, 4 in SCI-EXPANDED, and 3 were in both SSCI as well as in SCI-
This systematic review revealed that 45 of these contributions were empirical studies (38 of
them were quantitative studies, 6 involved interviews or focus groups, and 1 of them relied on
sentiment/content analysis, to explore primary data). Moreover, there were 16 reviews/discursive
papers, 9 exploratory analyses / descriptive research and 2 case studies.
Table 3 provides a list of contributions on crowdfunding of small businesses and/or startups.
It endorses the contributing authors, features the keywords of their manuscripts, clarifies their research
questions and describes their methodological approaches.
Table 3. A non-exhaustive list of articles on crowdfunding of small businesses and startups (sorted from highest to lowest citations)
WOS Scopus Authors Year Source
SSCI ✓ Hornuf and
This research describes the German
equity crowdfunding market and the
business model of different portals.
The authors formulate hypotheses on
various allocation mechanisms, the
influence of information, and
behavioral aspects of crowd-
SSCI ✓ Hornuf and
Schwienbacher 2017 Small Business
This research aims to understand
how securities’ regulations can affect
equity crowdfunding in different
countries. The authors discuss about
exemptions to prospectuses and on
registration requirements (for project
SSCI ✓ Johnson et al. 2018
This research relies on social-
psychology theorizing - specifically
on the stereotype content model
(SCM) - to explore an unanticipated
female advantage in informal
SSCI ✓ Paschen 2017 Business
This research presents a framework
that describes the startup’s
crowdfunding life cycle. It also
provides practical advice on
crowdfunding best practices.
SSCI ✓ Brown et al. 2017 Business
This research examines the extent to
which crowdfunding websites are
accessible to organizations. The
authors discuss on these marketing
SSCI ✓ Hornuf et al. 2018
Follow‐up funding, Firm
This study investigates the
determinants of follow
and elaborate on firm failures - after
an equity crowdfunding campaign
has taken place.
SSCI ✓ Di Pietro et al. 2018
This article identifies the type of
inputs provided by equity investors.
It clarifies how these inputs are
related to startups’ and founders’
characteristics (and on the startups’
SSCI ✓ Kgoroeadira, et al. 2019 Small Business
This research examines an American
online, peer-to-peer (P2P) loan
crowdfunding website. It explores
whether this innovation makes any
difference to the recipients of
SSCI ✓ Hoegen et al. 2018 Electronic
crowdfunding; types of
This research examines 68 articles to
better understand relevant influence
factors relating to crowdfunding
SSCI ✓ Eiteneyer et al. 2019 Research Policy
Open innovation; Social
This research explores how
community-derived social capital
influences the ventures’ approach to
engaging backers in new product
development. The researchers clarify
how this, in turn, advances product
SSCI ✓ Block et al. 2021 Small Business
This editorial article is focused on
crowdfunding and on initial coin
offerings (relating to the
entrepreneurial finance market).
SSCI ✓ Hervé and
This research explores the literature
that links crowdfunding with
SSCI ✓ Berns et al 2020 Journal of
This research uses a social
responsibility lens to examine
whether crowd-funders on a lending-
based prosocial platform (Kiva) lend
their money based on altruistic or
SSCI ✓ Mamonov et al. 2017 Venture Capital
JOBS act; Title II; Real
This research explores how Title II
crowdfunding fits into the larger
crowdfunding landscape. The authors
seek to understand the types of
business ventures that have been
successful in raising capital under
SSCI ✓ Bonini and Capizzi 2019 Venture Capital
Business angels; Equity
This paper reviews the main features,
investment policies and risk-return
profiles of institutional and informal
investors (those operating in the very
early stage of the life cycle of
SSCI ✓ Kaminski and Hopp 2020 Small Business
Pitch, Machine learning,
Neural network, Natural
This paper introduces a neural
network and natural language
processing approach to predict the
outcome of crowdfunding startup
pitches by using text, speech, and
video metadata in 20,188
SSCI ✓ Gupta and Bose 2019
business model; Market
This research investigates how
digital ventures gain strategic
knowledge for the successful
transformation of business models.
The researchers investigate
Wishberry, an online crowdfunding
startup in India.
ESCI ✓ Polena and Regner 2018 Games
peer lending; P2P;
Credit grade; FICO
score; Default risk.
This research explores the factors
that can affect the borrowers’ default
in P2P lending. The researchers rely
on a new data set consisting of
70,673 loan observations from the
ESCI ✓ Cox and Nguyen 2018
Journal of Small
This research investigates the extent
to which rewards-based
crowdfunding could provide
financial support for start-ups and
SSCI ✓ Li and Wang 2019
Public goods; Private
This study provides a better
understanding of backer motivations
by empirically investigating their
attitudes during different stages of
the funded projects.
SSCI ✓ Groza et al. 2020
Social capital; Female
This study integrates social capital
theory along with the theory of
choice homophily to better
understand the motivating factors of
male and female investors.
SSCI ✓ Schwienbacher 2019 Venture Capital
Fintech; Equity finance.
This article reviews achievements
that were made in the last 10 years
since the emergence of
crowdfunding. The author identifies
ESCI ✓ Malaga et al. 2018
This research explores whether Title
II equity crowdfunding represents an
opportunity for women-owned
companies to raise their capital
requirements (at rates similar to
companies owned by men
SSCI ✓ Kgoroeadira et al. 2018 Finance a Uver -
Czech Journal of
This research focuses on reward-
based crowdfunding and identifies
the basic determinants of successful
SSCI ✓ Kim and Hall 2020 Current Issues in
Venture quality theory;
This study develops and tests an
inclusive and integrated theoretical
framework on the concepts of
venture quality, uncertainty level,
participation, word-of-mouth, and re-
participation in tourism investment
SSCI ✓ Lim and Busenitz 2020
Journal of Small
This research explores the
importance and detrimental impact of
specific human capital characteristics
SSCI ✓ Li et al. 2019 Sustainability
Perceived net goal
The research relied on the goal
attainment theory (GAT) to explore
the consumers’ intentions to use
SSCI ✓ Johan and Zhang 2021
Industry effect; Business
This research investigates startup
characteristics and clarifies how they
influence business valuations of
representative industries in equity
SSCI ✓ Cumming et al. 2020
Voting, Trust, Equity
This research explores what
motivates individuals to withdraw
from their initial commitment to
SSCI ✓ Yang and Lee 2019
Status quo bias theory,
This study investigates the enablers
and inhibitors of crowdfunding from
the perspective of startups by
employing the two‐factor theory,
status quo bias theory (SQBT), and
innovation diffusion theory (IDT).
SSCI ✓ Tiberius and
Journal of Small
This research explores the
development of equity crowdfunding
(ECF) through an international
SSCI ✓ Moro-Visconti et al. 2020 Sustainability
cash flows; Market
This research analyzes the
differences between Fin Techs and
traditional banks in market valuation.
It explores the potential of digital
interaction and cross-pollination of
complementary business models.
ESCI ✓ Subramanian 2020 Managerial
This research describes the security
token architecture as an application
of smart contracts. The author
illustrates the implementation and
design of a commonly used financial
instrument that is known as Simple
Agreement for Future Equity
ESCI ✓ Cheong et al. 2020
Small business, Credit
access, Tax structure,
This study investigates the effects of
credit access and tax structures on
the performance of manufacturing
small and medium sized enterprises
SSCI ✓ Foster 2019
This research uses daily panel data to
study the effects that entrepreneurs’
social networks have on the success
of their crowdfunding projects.
ESCI ✓ Paoloni et al. 2019
VINE Journal of
This research analyzes the effects of
crowdfunding on small- and
medium-sized enterprises (SMEs)
and on startups firms.
✓ Gan et al. 2021 Management
coin offerings; ICOs;
Moral hazard; Security
token offerings; STOs;
This paper investigates whether asset
tokenization a viable means to
finance start-ups. The researchers
describe different type of tokens.
SSCI ✓ Harlow 2021 Digital
audience; Online news.
This study investigates perceptions
about crowdfunding journalism in
seven Latin American countries.
SSCI ✓ Giudici and Agstner 2019
Freedom of contract;
This research analyzes the Italian
company law that is intended to
promote startup creation.
SSCI ✓ Goethner et al. 2021
This research explores how the Small
Investor Protection Act is affecting
the investors’ behaviors at
‘Companisto’, Germany's largest
ECF portal for startup firms.
SSCI ✓ Lazzaro and Noonan 2021
Funding for the arts and
comparative analysis of
regulation policy; United
States; European Union.
This research assesses the benefits
and barriers of crowdfunding. The
authors analyze regulatory markets in
the United States and within the
ESCI ✓ Hashemi Joo et al. 2020 Managerial
coin offering (ICO).
This research recognizes the benefits
of the initial coin offering (ICO) as a
way of raising funds. It presents a
detailed comparison between the
ICO and initial public offering to
clarify the future possibilities of this
new funding method.
ESCI ✓ Hendratmi et al. 2020
This study provides an Islamic
crowdfunding model that is based on
a website platform for startup
ESCI ✓ Teberga and Oliva 2018 Benchmarking
This research discusses about the
risks of using ‘Catarse’, the biggest
crowdfunding site in Latin America.
SSCI ✓ Saura et al. 2021
This research identifies opportunities
for investors of Indian startups. The
authors describe key indicators that
characterize the startup ecosystem in
SSCI ✓ Feola et al. 2021 Small Business
investors; New venture.
This study segments the Italian
equity crowdfunding investors’
market by means of a cluster
analysis. It explores the differences
ESCI ✓ Chaudhari and Sinha 2021
Big data; Startup;
This paper investigates the trends
that are driving the growth of the
Indian startup ecosystem.
ESCI ✓ Rahman et al. 2020
This research develops a framework
for Sharīah-compliant equity-based
crowdfunding (SEC) for
entrepreneurship development in
Theory of reasoned
SSCI ✓ Kleinert et al. 2020 Small Business
This research uses the signaling
theory to explore the effects of prior
financing on firm quality.
SSCI ✓ Lee 2019
FinTech; financial law
This research focuses on the current
state of equity crowdfunding in Hong
Kong. It also describes the legal
requirements for equity
crowdfunding in other m
ESCI ✓ Roedenbeck and Lieb 2018
Board game, Kickstarter,
This research investigates how a
small business could use
crowdfunding within and after their
ESCI ✓ Cox and Nguyen 2018
This paper examines the differences
crowdfunding and P2P
✓ Zhao et al. 2018 Wireless Personal
of taking social
The research studies the relationship
between entrepreneurial motivation
and crowdfunding success.
ESCI ✓ Miglo 2020 Administrative
in Canada; Small
This article analyzes the financing of
entrepreneurial firms in Canada. The
author discusses about crowdfunding
ideas/theories and presents his
ESCI ✓ Shang et al. 2020 Chinese
This study investigates the impact of
monitoring venture investors’
crowdfunding projects on product
innovation performance (in follow-
SSCI ✓ Theokary et al. 2020
Journal of Small
business/ small and
This research examines how the
choice of a crowdfunding partner
could influence the fundraising
outcomes of a project.
SSCI ✓ Fortezza et al. 2021
This research offers a thorough view
on the dynamic processes
characterizing the participation of
start-ups in more than one
SSCI ✓ Reichenbach and
Walther 2021 Financial
offering success, Startup
This study investigates signal
validity in equity-based
crowdfunding. The authors explore
whether signals could increase crowd
participation and if they are
associated with higher post-offering
✓ Jiménez-Jiménez et al. 2021 Mathematics
theory; Signaling; Price
This research investigates rewards-
based crowdfunding as an innovative
financing opportunity for startups
✓ Aggarwal et al. 2021
This research puts forward a
Bayesian model that assesses
investors’ evaluation skills. The
authors identify exemplary lead
✓ Lin and Wang 2021 Mathematics
theory; External equity
network process; Start-
This study explores how start-ups
can make the optimal evaluations
among different external equity
crowdfunding solutions and how
they could establish a network
decision support model.
SSCI ✓ Bakri et al. 2021
This research identifies the factors
that could influence the retailers'
intentions to source funds through
crowdfunding platforms. This
research relied on the UTAUT model
to determine the retailers’ intentions
ESCI ✓ Moirangthem and Nag 2021
Asian Journal of
This research sheds light on venture
capital firms including Tiger Global,
Accel Partners and DST Global that
provided finance to Flipkart, an
ESCI ✓ Ko and Ko 2021
Journal of Global
Success factors; South
This study explores the success
factors of fashion-related
crowdfunding projects The authors
evaluate their performance (through
ESCI ✓ Zabolotnikova et al. 2020
services market; Small
This research explores alternative
sources for the financing of small
and medium-sized business projects
✓ Garaus et al. 2020
This study sheds light on the crowd
equity investors’ post-investment
ESCI ✓ Smirnova et al. 2020
This study investigates key success
factors of crowdfunding investments.
The authors explore the designs of
their securities, crowdfunding
settings, their campaigns, etc.
ESCI ✓ Mourao et al. 2018
This paper describes the success
factors of crowdfunding projects.
The authors discuss about
‘Kickante’, an important
crowdfunding Brazilian platform.
✓ Yan et al. 2018 Sustainability
Venture capital; Cultural
finance; Green finance.
This study explores the project
initiators’ backgrounds and
experiences with crowdfunding
SSCI ✓ Carvajal et al. 2018 Journal of
Value of information;
This research sheds light on a firm
that uses crowdfunding to raise
finance for its research and
development phase of a project.
ESCI ✓ Shengfen 2018 China Nonprofit
This study focuses on four funding
strategies including venture
philanthropy, social impact
investment, social impact bonds and
SSCI ✓ Cohen 2017 Administrative
subprime mortgages; US
securities and exchange
our businesses startups
act; JOBS Act.
This research critically evaluates the
strengths and weaknesses of the
United States’ Securities and
Exchange Commission (SEC)
"Jumpstart Our Business Startups"
Note: These articles were published during a 5-year period between 2017-2021. They were sorted from highest to lowest number of citations.
An inductive approach was used to integrate the findings from the systematic review (on
crowdfunding of small businesses and startups). The researchers organized the relevant content
from the extracted articles, scrutinized it, and identified the themes on this topic. Their
bibliographic analysis revealed that crowdfunding (Eiteneyer et al., 2019; Kaminski et al., 2020;
Kgoroeadira et al., 2019; Paschen, 2017; Di Pietro et al., 2018) crowd sourcing (Chaudhari and
Sinha, 2021; Eiteneyer et al., 2019; Foster, 2019; Paoloni et al., 2019; Paschen, 2017), equity
crowdfunding (Bonini and Capizzi, 2019; Hornuf and Schwienbacher, 2017; Hornuf and
Schwienbacher, 2018; Tiberius and Hauptmeijer, 2021), as well as crowd investing /crowd-
investing (Ezangina and Evstratov, 2019; Goethner et al., 2021; Hornuf and Schwienbacher, 2017;
Hornuf and Schwienbacher, 2018) were the most used keywords by the authors that were featured
in this analysis.
Evidently, previous contributions examined various aspects relating to (i) the demand for
crowdfunding products and/or, to (ii) the supply of crowdfunding finance. The following sections
critically appraise two sides of the same coin. The researchers elaborate on the extant literature
that is focused on crowdsourcing as well as on crowd-investing.
3.4.1 The use of crowdfunding platforms to raise capital requirements
Previous research confirmed that small businesses and startups experience difficulties in
raising modest amounts of capital (Lazzaro and Noonan, 2021; Schwienbacher, 2019). External
threats from the marketing environment including the state of the economy, government
regulations, tax laws, labor legislation and fluctuations in interest rates, among other issues, could
have devastating effects on such entities (Bonini and Capizzi, 2019). As a result, they may find
themselves in an equity gap, if they cannot raise finance to foster innovation for their business
(Hoegen et al., 2018). Their access to equity or debt financing through traditional institutions like
banks and/or other financial service providers is usually very limited (Camilleri, 2018; Boylan et
al., 2018). Typically, they are required to provide a collateral to obtain finance, even though, young
enterprises and startups with promising opportunities for potential investment may usually prefer
having a lower debt/equity ratio (Camilleri and Valeri, 2021; Miglo, 2020).
In the past decade, a number of individuals, groups, organizations as well as entrepreneurs
and startups resorted to crowdfunding, to finance their ideas, ventures or projects (Mollick, 2014;
Troise, Tani and Jones, 2020). Various researchers focused on specific crowdfunding products like
donation-based crowdfunding (Lazzaro and Noonan, 2021), rewards-based crowdfunding (Boylan
et al., 2018; Cox and Nguyen, 2018; Jiménez-Jiménez et al., 2021; Zhao et al., 2018), equity
crowdfunding (Bonini and Capizzi, 2019; Feola et al., 2021; Goethner et al., 2021; Hornuf and
Schwienbacher, 2017; Hornuf and Schwienbacher, 2018; Hornuf et al., 2018; Lee, 2019; Lin and
Wang, 2021; Mamonov et al., 2017), peer-to-peer (P2P) lending/lending crowdfunding (Boylan
et al., 2018; Kgoroeadira et al., 2019; Polena and Regner, 2018), and debt-securities crowdfunding
(Boylan et al., 2018; Cox and Nguyen, 2018; Gan et al., 2021; Subramanian, 2020), among other
In many cases, these authors described the differences between these sources of capital.
For instance, Kgoroeadira et al. (2019) explained that peer-to-peer lending is very similar to
traditional borrowing from a bank as crowd investors lend money to a company with the
understanding that they will be repaid with interest. Hornuf and Schwienbacher (2018) contended
that equity crowdfunding projects may usually involve the sale of a stake of a business to a number
of investors. This type of crowdfunding is very similar to venture capital finance. Conversely,
individuals may be drawn to rewards-based crowdfunding to receive non-financial rewards, such
as goods or services, in exchange of their contributions (Cox and Nguyen, 2018). Alternatively,
they may be willing to donate their funds for charitable, humanitarian or philanthropic purposes,
without expecting any financial returns (Camilleri, 2021b; Lazzaro and Noonan, 2021).
Various researchers discussed on the pros and cons of using crowdfunding platforms
(Presenza et al. 2019; Yang and Lee, 2019). Very often, they noted that the project initiators of
successful crowdfunding campaigns were capable of communicating their business propositions
and solutions, as they raised awareness on disruptive innovations among large audiences through
digital media (Eiteneyer et al., 2019; Kim and Hall, 2020; Paschen, 2017).
The diffusion of innovations theory suggests that there are five key elements that could
influence the diffusion of a new idea (through crowdfunding platforms), including the innovation
itself, adopters/users, communication/media channels, time, as well as social systems (Kleinert,
Volkmann and Grünhagen, 2020; Lim and Busenitz, 2020; Reichenbach and Walther, 2021;
Rogers, 2003). Crowdfunding platforms allow creators to promote their projects to generate
interest and to ultimately lure investors (Yang and Lee, 2019; Yang et al., 2016). Notwithstanding,
project initiators as well as the crowdfunding investors are affected by various communication
channels, including by competing organizations and regulatory institutions (Hornuf and
Schwienbacher, 2017; Tiberius and Hauptmeijer, 2021; Carvajal, Rostek and Sublet, 2018).
The subjective norms in society can influence the individuals’ intentions to use innovations
like crowdfunding platforms (Duasa, 2020; Munim, 2019; Shneor and Rahman et al., 2020). The
crowdfunding projects could attract the attention of competitors, who may be quicker to develop
technological innovations or substitute products, as they could have access to financial capital,
economies of scale and scope, to mimic small businesses and start-ups’ ideas (Giudici and Agstner,
Debatably, this argumentation is synonymous with the resource-based view theory (RBV).
New businesses like startups, as well as small businesses may usually possess fewer resources
including liquidity, than established businesses (Camilleri & Valeri, 2021; Elia et al., 2021). They
may also have access to limited competences and capabilities. Notwithstanding, they may not be
considered as legitimate as their larger counterparts by their stakeholders, including by the
government, creditors, venture capitalists and other investors (Valančienė and Jegelevičiūtė 2014).
However, in the past decade, a number of regulatory institutions have introduced
legislation in various contexts (like Jumpstart Our Business Startups - JOBS Act) (Cohen, 2017;
Hornuf and Schwienbacher, 2017; Mamonov et al., 2017). These laws and the revisions that
followed, were intended to support early-stage companies and startups to raise their financial
requirements through crowdfunding avenues.
Crowdfunding allows for the democratization of funding, as it is essentially borderless and
not geographically constrained (Josefy et al., 2017; Mollick and Robb, 2016). Businesses,
enterprises and startups can use crowdfunding platforms to raise funds for on their projects. They
can appeal to larger audiences through the digital media. These project initiators are encouraged
to engage with online investors through crowdfunding platforms, to provide feedback relating to
products or services, in order to increase their chances of reaching their financial goals (Shahab et
al., 2021). Ultimately, it is in their interest to disseminate relevant content to project backers for
transparency purposes (Camilleri, 2022), and to improve their credentials with stakeholders.
3.4.2 Investments in crowd funding products
Generally, crowdfunding links the creators/proponents of projects with potential investors
(Goethner et al., 2021; Hornuf and Schwienbacher, 2017). The latter ones could avail of
crowdfunding digital platforms to reduce their search and transaction costs. These online users
hope to identify lucrative investment opportu4nities that could yield them attractive returns. Such
investors may be drawn by high-quality, market-oriented (commercial) projects and by their
rewards, as opposed to community-oriented, not-for-profit projects with social or environmental
purposes (Camilleri, 2021a), that may be promoted via low minimum prices, to appeal to sponsors
(Jiménez-Jiménez et al., 2021).
Project initiators of commercial entities may be wary of providing details of their
intellectual properties (particularly during the early stages of their crowdfunding campaigns), as
they may be concerned that someone could steal their ideas, innovations and projects (Kim and
Hall, 2020). They could (willingly or unwillingly) decide not to disclose material information like
historic defaults or hidden costs, even after the investor becomes a member of the crowdfunding
platform (Carvajal et al., 2018; Kleinert et al., 2020; Lim and Busenitz, 2020; Reichenbach and
As a result, investors of crowdfunded projects may not always have adequate and sufficient
information on the borrowers of finance, as crowdfunding platforms may not exercise thorough
due diligence on their users (Paschen, 2017). This argument is related to the reasoning behind the
signaling theory. In fact, many researchers relied on this theory to explore the signals that are
communicated by project creators to lure investments from crowd funders (Kleinert et al., 2020;
Lim and Busenitz, 2020; Reichenbach and Walther, 2021).
Notwithstanding, the most popular digital (crowdfunding) platforms may or may not
operate from the same jurisdiction of the crowd-investors (Harlow, 2021; Hornuf and
Schwienbacher, 2017). Hence, they are not always offering complete protection according to local
legislation and regulations. Thus, they could not guarantee the same level of comprehensive
appraisals that are provided by local financial service providers. This contentious issue could lead
to problems related to information asymmetry (Kgoroeadira et al., 2019; Kleinert et al., 2020;
Paschen, 2017). In some circumstances, the failure to disclose material information to crowd-
investors may result in near-fraudulent consequences (Hornuf et al., 2018).
Investors may usually try to find a tradeoff between potential rewards and risks from
crowdfunding opportunities (Hoegen et al., 2018). They could be attracted by (higher than normal)
potential returns that certain crowd-funding activities claim to offer (Reichenbach and
Walther,2021). Therefore, they ought to be cautious and vigilant on their possible risks of default
(Polena and Regner, 2018). If equity crowdfunded projects fail, investors could not be in a position
to pay back capitals and to provide any returns to their investors. Similarly, the investors of P2P
crowdfunding/lending may also risk losing their funds through unsecured loans, especially if the
borrowers did not require any collateral (Boylan et al., 2018; Kgoroeadira et al., 2019; Polena and
Regner, 2018). The investors of equity financing may encounter certain difficulties, other than
default (Hoegen et al., 2018). They can find out that there is no lucrative secondary market for
their shares (Garaus, et al., 2020). As a result, they might find themselves liquidating them at a
significant loss, or of diluting their stock value.
This contribution has presented the findings from a rigorous systematic analysis of
academic articles focused on crowdfunding of small businesses and startups, that were published
during the past 5 years, between January 2017 and December 2021.
The researchers clearly appraised them. They shed light on their underlying research
questions, described the methodology that was used to capture and analyze the data, and featured
the keywords that were associated with the articles’ content. Afterwards, they synthesized the
findings from the extracted contributions, and discussed about the benefits and costs of using
crowdfunding platforms to raise finance, or as plausible investment options. The authors
elaborated about various challenges and discussed about the opportunities for project initiators
(like small business and startups), as well as for crowd-investors.
This systematic review reported that, currently, there are just a few articles that were linking
this timely topic with key theoretical underpinnings relating to technology adoption and/or
innovation management (e.g. Diffusion of Innovations Theory, TAM, TPB, TRA or UTAUT),
strategic management (e.g. Decision-making Theory; Goal Attainment Theory or RBV),
accounting and financial reporting (E.g. Signaling Theory or Venture Quality Theory), and
normative/business ethics research (e.g. social capital theory, social responsibility theory and
stakeholder theory), among others.
The results from the bibliographic research confirmed that, for the time being, there are
limited discursive review papers on crowdfunding of small businesses and startups. This
contribution sought to address this gap in the academic literature. It identifies the facilitators and
barriers of using crowdfunding platforms for crowd sourcing and/or for crowd investing purposes,
to better understand the demand / supply of crowdfunding.
This systematic analysis was focused on “crowdfunding” and “small business(es)” or
“startup(s)”. In future, other researchers may explore the crowd sourcing possibilities of different
types of businesses including sole proprietorships, partnerships, limited partnerships, limited
liability companies (LLCs), nonprofits, and cooperatives (co-ops), among other entities. They may
categorize enterprises, according to their staff count. Prospective authors could investigate the
financing of micro enterprises, SMEs, intermediate-sized enterprises and/or large-sized
enterprises. Moreover, they could even distinguish among various start-ups like small business
startups, scalable startups, buyable startups and/or off-shoot startups, etc.). Therefore, they may
consider using different keywords in their bibliographic studies.
The authors thank the editor, guest editors and the reviewers of this journal, for their constructive
remarks and suggestions. They were much appreciated.
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