Seite - 205 - in Digital Entrepreneurship - Impact on Business and Society

sources of alternative funding reflect the heterogeneity of the stakeholders behind them. Their goalsmay befinancial, non-financial, or a blend of bothfinancial and non-financial in the case of government, university, and social venture capital funds. In other cases, fundingmay be provided by stakeholders who just like the ideaor consider themselves fans (Blocket al. 2018). Similarly, thebenefits tofirms include not only access to finance but infrastructure, customers, or legitimacy (Bellavitis et al. 2017). 3 TheDigital Alternatives: Online Alternative Finance Not all of the new sources of alternative finance are Internet-enabled. Online alternativefinance involves soliciting funds from thepublic for aproject or venture through an Internet-based intermediate platform. Like traditional financing, these may be debt or equity-based. The twomost prominent categories of online alter- native finance are crowdfunding (including peer-to-peer lending) and token offer- ings (including ICOs andSTOs). TheGlobal CrowdfundingMarketwas valued at Table 1 Major structural changes in the market for entrepreneurial finance in the last twenty years Structural change Description Implication Demise of “classic venture capital” Withdrawal of institutional venture capital from the start-up and early-stage capital market due to the economics ofmanaging and investing increasingly larger funds Smaller number of larger transactions thus affecting business development and economic growth Closure of the IPOmarket The IPOmarket is only available to all intents and purposes to larger companies Has resulted in “second equity gap” and growing importance in long-term angel investors Emergence of formally organised angel groups The development, oftenwith government support, of business angel networks (BANs)which act as matchmaking services for entrepreneurs and investors Emergence of formalmanaged angel syndicates, syndicate managers/gatekeepers, formal and informal alliances of angel investors Demise of traditional funding escalator and replacement with a bundlingmodel involving angel groups co-investingwith other funds Identificationof a “scale-up” problem The displacement of individual business angels byBANs and the requirement for larger long-term investment commitmentsmay result in a “first equity gap” Downwardmanagement of entrepreneurs’ growth aspirations to match the availability of capital Changing geography of venture capital Venture capital investment tends to be concentrated in a relatively small number of theworld’smajor cities Venture capital has an uneven impact on urban and regional economic development Adapted fromHarrison andMason (2019) NewSources of Entrepreneurial Finance 211