ENTREPRENEURSHIP FINANCING: A SHIFT TO CROWDFUNDING AS ENABLER OF STARTUP AND BUSINESS SUSTAINABILITY

Abstract

Entrepreneurship remains one of the most studied topics in the literature because of its assumed impact on generating employment, poverty alleviation and contribution to economic growth worldwide. Despite the assumed benefits, access to financial resources continues to be a major factor hampering startups, connectivity of entrepreneurial firms to global networks and competitiveness. The objective of this paper is to explore the role of the crowdfunding financing model, generally viewed as a modern financing option, in startups and venture sustainability. It critically examines whether crowdfunding is a viable alternative to the traditional methods of financing entrepreneurial businesses and its effect on business sustainability. A literature review approach was adopted to identify the effect of two crowdfunding options, crowd-equity and peer-to-peer, on startups and entrepreneurial firms’ sustainability. Findings reveal a positive influence of crowdfunding on financing startups, and on entrepreneurial sustainability as it covers the financing gap of traditional sources such as bank loans, business angels and venture capitalists. The study suggests that there is a need for more emphasis on crowdfunding as a strategic option for promoting and sustaining entrepreneurship. The introduction of regulatory framework aimed at protecting crowd-funders from losing their investments will enhance crowdfunding outcome.