New financing alternatives, notably crowdfunding, microfinance and peer-to-peer lending, are becoming increasingly influential funding mechanisms for start-ups. Despite the importance of these sources in funding ventures with growth potential, only a small number of studies have examined these phenomena.
We know little about how and why firms access these funding sources and their resultant growth.
This project will examine the following questions:
- What determines a firm’s ability to access and use alternative sources of finance?
- How aware are entrepreneurs of alternative sources of finance?
- What is the role and nature of social networks in a successful alternative finance campaign?
- What is the impact of alternative funding sources on ventures receiving this funding?
For firms to grow, there also needs to be a bridge between alternative finance and later stage investments. Accordingly, we will also examine the role of linkages with business angel funders. We will use publicly available data from various funding platforms to look at these questions. The study has significant implications for policy makers who need to understand and promote these new financial alternatives in seeding entrepreneurship with growth potential.