The equity crowdfunding choice: A demand-side perspective

Abstract In recent years, equity crowdfunding has become increasingly popular for capital-seeking start-ups. A widely held assumption is that these ventures have no other risk capital options and see it as their “last resort” to obtain funding. However, not much is known about their narrow and broader motivational backgrounds. Based on case studies of ten crowdfunded ventures, this study unveils the motives to use equity crowdfunding and links them with organisational characteristics. The analysis shows that ventures’ risk capital choices in this setting are motivated by crowdfunding-specific investment conditions, value-add features, and their fit with ongoing organisational challenges. Thus, I provide a detailed picture of the specific role that equity crowdfunding is intended to play in these firms. Based on the analysis, a theoretical model of four motivational types is developed that could stimulate future research. I argue that instead of focusing exclusively on cost and control arguments, research about investor decisions in equity crowdfunding should also consider different forms of resourcefulness.