Seite - 204 - in Digital Entrepreneurship - Impact on Business and Society

cash flow, under-collateralisation, lack of sophisticated financial statements, and higher default risks are just someof the factors that impede access to credit (Bhide 2003;Hall andLerner 2010;OECD2013).While entrepreneurs and SMEowners report that credit conditions have improved in recent years, they also report that access to finance is amajor concern (OECD2019). Entrepreneurs are exploiting new technologies to develop, market, and sell traditional andnewproducts and services in newways to globalmarkets 24/7/365. At the same time, these technologies are changing how entrepreneurs access funding and fromwhom.As a result, a large number of new channels to investors have been introduced to the market mobilising new sources of capital. Entrepre- neurs have never had so much choice with respect to sources of funding. The remainderof this chapteroutlines thechanging landscapeof entrepreneurialfinance and discusses two Internet-enabled sources of entrepreneurial finance in greater detail—crowdfunding and token offerings. These are illustrated with two case studies on Jolla Software andAspenCoin. The former raised over US$1.8million from over 13,000 contributors in 21 days using the IndieGoGo crowdfunding platform (Jolla 2014c), while the latter raised over US$18million through a security token offering (Carroll 2018b). The chapter concludeswith a summary of the key takeaways for entrepreneurs. 2 TheNewAlternatives for Entrepreneurial Finance Up until the turn of the century, the traditional sources of entrepreneurial finance were the so-called three “Fs”—friends, family, and fools—and then as a venture evolved, additionalfinancewas sourced frombusinessangels, venturecapitalfirms, and capitalmarkets (Bellavitis et al. 2017). Over the last twenty years, themarket for entrepreneurial finance began to change in terms of both its structure and, relatedly, its participants (Harrison and Mason 2019). Table 1 summarises the structural changes and the implicationsof these changes for entrepreneurialfinance. Alongside the structural changes highlighted in Table 1, Harrison andMason (2019) note that a large number of new actors have entered themarketmobilising new sources of capital. To some extent, these new actors (presented in Table 2) mitigate thenegativeeffectsof structural changesbyproviding fundingat formative stages (e.g. university orgovernmentventure capital), reactivating the threeFs, and providing a wider geographic reach for fundraising (e.g. crowdfunding), and democratising venture capital (e.g. token offerings—initial coin offerings (ICOs) and security token offerings (STOs)). These new actors are re-conceptualising the funding cycle by introducing new peculiarities and dynamics (Brown et al. 2019;Martino et al. 2019). Rather than a relatively linear funding cycle, new sources of entrepreneurialfinance can be used interchangeablyand revisitedmany times (Bellavitis et al. 2017).Furthermore, they maynot havefinancial goals or require equity at all. The peculiarities of these new 210 T. Lynn and P. Rosati