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transactions to which it is applied (Agrawal et al. 2015). Massolution (2015) reported that crowdfunding investments worldwide grew to US$34.4 billion in 2015 from over 1250 crowdfunding platforms. Crowdfunding differs from traditional VC investments by the characteristics of investors, the investment model, and indeed the type of relationship the investors havewith the investee.First, asmentionedearlier, unlike traditional investment, the overwhelming majority of crowdfunders are not professional but rather comprise friends, family, and thosemotivatedbypreferential access toproductsor feelingsof connectedness to a community or a social cause (Gerber et al. 2012; Brown et al. 2019). Second, crowdfunding investment models are more varied than traditional investment and include crowdinvesting (lending and equity-based crowdfunding) and crowdsponsoring (donation, reward, and pre-purchase) (Griffin 2012). Third, the relationship between investors and investees in crowdfunding models differs from traditional investment (Ley andWeaven 2011). Due to the nature of crowd- funding, the ability to mitigate risk through deal screening, deal referrals, infor- mation sensitivity and due diligence before investment are limited. Similarly, ex-post risk mitigation through contractual rights, board representation, value addingcapability, economic life, andexit optionsare also limited (LeyandWeaven 2011). In the caseof donation and reward, andpre-purchase crowdfundingmodels, thesemay not even be relevant. Conducting a crowdfunding campaign can be particularly beneficial for entre- preneurs as it provides themwith access to capital but also generates a community effect around the project.Research suggests thatmany crowdfunders aremotivated by early or preferential access to innovative products/services and feelings of connectedness to a community (Gerber and Hui 2013). As discussed earlier, crowdfunding also has the potential to eliminate geographical boundaries between entrepreneurs and investors therefore providing them access to a larger pool of resources and projects, respectively. This may result in more investment opportu- nities for capital givers and inmore business and innovation, business and growth Crowd Promoter / Entrepreneur Crowdfunding Platform Funding (net of commissions) Reward Funding Reward Fig. 1 Crowdfunding process Table 3 All-or-nothing versus keep-it-all (Cumming et al. 2020) All-or-nothing Entrepreneurial firms set a capital raising goal belowwhich the entrepreneurial firm does not keep any of the pledged funds and the crowd does not receive any reward Keep-it-all Entrepreneurial firms can keep the entire pledged amount regardless as to whether or not the stated capital raising goal is reached 218 T. Lynn and P. Rosati