Seite - 211 - in Digital Entrepreneurship - Impact on Business and Society

10.2 BillionUS$ in 2018 and is expected to reach 28.8 BillionUS$with aCAGR of 16% by 2025 (Valuates Reports 2019). More recently, token offerings have gained tractionprovidingmore than$26 billion in funding throughmore than1700 thousand successful offerings (ICObench 2019a). 3.1 Crowdfunding 3.1.1 Equity, Reward, andDonationCrowdfunding Crowdfunding enables entrepreneurs to attract external finance and develop their business idea by sourcing small amounts of money from a large number of indi- viduals, typically non-professional, i.e. the “crowd” instead of relatively small group of professional investors (Ordanini et al. 2011; Belleflamme et al. 2014; Brown et al. 2019). Crowdfunding platforms exploit the power of the Internet and platformisation to create a two-sided market that links capital-seekers (crowdfun- ders) and capital givers (investors) generating revenues for themselves through a commission on funds (Haas et al. 2014;Zvilichovsky et al. 2013;Zaggl andBlock 2019). Figure 1 provides an overview of the typical process for a crowdfunding cam- paign. Promoters submit their project idea to a crowdfunding platform describing the idea, the amount of capital sought, the team, the reward promised, and the length of the campaign. Platforms typically allow promoters to upload interactive material. Thismay include images or video.Aproperly designed narrative is quite important for the successof crowdfundingcampaignsand is consideredaneffective way of building legitimacy around new ventures andmobilising diverse and dis- persed actors like crowdfunders (Frydrych et al. 2014; Manning and Bejarano 2017). Properly designed communication strategies, both pre and post-launch of a campaign are key elements for its success as they help creating awareness for the project (Gierczak et al. 2016). Furthermore, crowdfunding campaigns typically heavily relyonsocialmediaandonlinecommunication inorder to reachawideand dispersed audience and in particular potential investors unknown to the promoters (Agrawal et al. 2011; Lynn et al. 2017). Most of the funds tend to be collected during thefirst and the lastweeksof campaigns, therefore, it is important to sustain communicationandengagement effortsuntil theendofacampaign tomaximise the amount of capital collected (Kuppuswamy andBayus 2018). Crowdfunding platforms do not borrow, pool, or lend money on their own account but enable investors to pledge funds, often on an or all-or-nothing or keep-it-all basis (Cumming et al. 2015; Haas et al. 2014) (see Table 3). The eco- nomicmodel for theseplatforms is typically a commissionbasedon funds raisedor donations received.As such,when a campaign ends, promoters receive the amount of capital raised net of the platform fee.A key differentiation of these platforms is that they cater for a wide range of projects including products, experience goods, social initiatives, andmore recently, researchprojects.Since its emergence in2010, crowdfunding has expanded in terms of the volume, variety, and value of NewSources of Entrepreneurial Finance 217