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Research Article Open access CC BY 4.0

Common types of Crowdfunding Models, Related Concepts and Its Impact on Business: A Brief Literature Review

Pema Wangchuk

Asian Journal of Economics, Business and Accounting · pp. 56–63 · Published 2 Oct 2021

10.9734/ajeba/2021/v21i1430471

Abstract

Crowdfunding is one of the tactics of raising finance by asking a large number of people each for a small amount of money to support innovative business ideas like new projects via the internet through various models. However, how individuals demonstrate readiness or solicitation on strategic networks in a virtual environment is much less clear and there is no comprehensive overview of literature review on different crowdfunding models. The present review puts an attempt to address these gaps and explored the impacts and the foremost crowdfunding concepts like funder, project creator and platform. This is an independent article based on a bibliographic search conducted using electronic databases such as EBSCO, DOAJ, RESEARCH LIFE, EMBASE, and Google Scholar. The result disclosed that the most universally applicable models of crowdfunding websites are; the equity-based model, donation/social based, lending model, and reward-based model. Interestingly, the review revealed that the lending and rewards models are leading in terms of funds raised across the globe and mostly adopted by investors. It also indicated the rapid growth of crowdfunding is helping small and medium businesses to create job opportunities for young people despite an increasingly challenging environment and its negative impacts on business. Finally, the review recommends researching crowd-funding and the impact of social media in the changing modern technologies and the legality of crowd-funding platforms in various nations.

Crowdfunding concepts equity-based crowdfunding reward-based crowdfunding lending based crowdfunding donation-based crowdfunding

Cited by 13

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Crowdfunding as an innovative financing mechanism

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