Crowdfunding in a Context of Financing Firms Through Their Life Cycle

Abstract

In this paper we first present some developed theories of financing that firms might accord with in their development stages. The framework, assumptions and predictions of the capital structure of firms in each theory is shown. Afterwards, crowdfunding, as a fairly new source of financing that is increasing significance, is described and is differentiated on the basis of the type of return on investment for the outside investors. In recent literature there have been models that introduce crowdfunding in the framework of financing firms through their life cycle stages. We point the difficulty of encompassing crowdfunding in the mentioned models because of characteristics that are unique to it from the perspective of the investor and the firm. While it is not surprising that crowdfunding is used in development stages, these characteristics make it difficult to construct a model of financing firms that has traditional means of financing and crowdfunding.

Success drivers of online equity crowdfunding campaigns

“…Entrepreneurial ventures can conduct equity crowdfunding campaigns at very early or early stages of their lifecycle (Cumming and Vismara, 2017;Horvatinović and Orsag, 2018), as well as at a growth stage when they have already reached market penetration and become financially healthy (Paschen, 2017). Consequently, equity crowdfunding investments carry typically very high risk and uncertainty, to the extent that crowdfunded ventures may fail even soon after the campaign (Lukkarinen, 2018;Signori and Vismara, 2016;Walthoff-Borm et al, 2018).…”

Internationalisation and governance issues in higher education

“…Pecking order theory is also based on the concept of asymmetric information that exists in the market. Accordingly, investors are always said to have weaker information than managers of institutions (Horvatinovic & Orsag 2018). Information sent to the public by managers is sometimes misleading, for example, information about retained earnings, which is regarded as the best signal by the public, might be jeopardised in order to attract the interest of the public.…”

Le lien entre le cycle de vie des TPE-PME et le crowdfunding. Une étude sur le territoire breton

“…Bien que leur étude présente l'intérêt de mieux comprendre les trajectoires de financement complexes et leur impact sur la gouvernance de l'entreprise, elle ne s'intéresse qu'aux premières étapes de la vie de l'entreprise. À partir de plusieurs études, entre autres celles de Lasrado et Lugmayr (2013), Rossi (2014) et Paschen (2017), Horvatinovic´ et Orsag (2018 montrent que, même si le crowdfunding est une source de financement utilisée lors des phases de lancement et de développement de l'entreprise, il est difficile d'établir un schéma type d'utilisation du crowdfunding en fonction de la position de l'entreprise dans son cycle de vie. Selon ces auteurs, cette difficulté résulte des caractéristiques propres au crowdfunding.…”