Mapping the field of crowdfunding and new ventures: a systematic literature review

Abstract

Purpose

Crowdfunding, an alternative funding source to support entrepreneurial initiatives, has increasingly attracted the attention of scholars. However, knowledge of the drivers and outcomes of crowdfunding is currently scant. This study thus presents a review of the extant literature on new ventures soliciting crowdfunding.

Design/methodology/approach

The authors conducted a systematic literature review (SLR) of peer-reviewed articles, identifying and thematically analyzing 58 publications.

Findings

The thematic analysis revealed six main themes: a) founders and crowdfunding, b) signaling and crowdfunding, c) digitalization and crowdfunding, d) outcomes, e) geography and crowdfunding and f) success factors. In addition, crucial research gaps are identified to guide future research.

Practical implications

Beyond classifying the material on the basis of the thematic analysis and identifying potential future research avenues, the study has main implications. The authors detailed how crowdfunding, as a source of entrepreneurial funding, differed from other funding sources and explored entrepreneurial challenges that may be encountered in managing crowdfunding campaigns. The findings may thus help in the design of crowdfunding campaigns and serve educators in various disciplines when teaching and training participants on designing and promoting crowdfunding campaigns.

Originality/value

After identifying and integrating results from relevant articles on crowdfunding, the authors explained dominant themes in the literature and proposed a conceptual framework wherein the authors highlight factors that influence crowdfunding outcomes. The authors highlight the increasing relevance of crowdfunding for new ventures and elucidate avenues for future research.

Citation

Chaudhary, S., Dhir, A., Battisti, E. and Kliestik, T. (2024), "Mapping the field of crowdfunding and new ventures: a systematic literature review", European Journal of Innovation Management, Vol. 27 No. 7, pp. 2210-2231. https://doi.org/10.1108/EJIM-05-2022-0241

1. Introduction

New ventures are organizations designed to bring novel ideas to the table, create markets and build repeatable and scalable business models (Gilbert et al., 2006). New ventures introduce products and service-based solutions that disturb the market position of large incumbent firms and are considered sources of “creative destruction” (Criscuolo et al., 2012). They play a crucial role in innovation, can transform entrepreneurial opportunities into profits and are often theorized as vital drivers of wealth generation, industry evolution and economic development (Davidsson and Gruenhagen, 2021). While technically superior in their field, new ventures – with the liability of “newness” – often lack the capabilities, managerial skills and resources necessary to run a successful business (Soto-Simeone et al., 2020; Wymer and Regan, 2005). Specifically, the scarcity of resources hampers innovation processes and the scaling up of new ventures (Shepherd and Gruber, 2021). Given this resource-constrained context, it is essential to understand how new ventures gain access to resources (Stenholm and Renko, 2016).

Prior studies have noted that resource-constrained new ventures raise funds by leveraging numerous sources, such as accelerators (Cohen et al., 2019), incubators (Grimaldi and Grandi, 2005) and university-based seed funds (Munari et al., 2015). In particular, crowdfunding has begun to draw scholars' attention to the issue of resource generation for new ventures (Böckel et al., 2021; Paoloni et al., 2019). Crowdfunding, drawing inspiration from microfinance (Morduch, 1999), involves sourcing resources from a network of external actors (Mollick, 2014). Belleflamme et al. (2014) defined crowdfunding as a call (essentially through a digital medium) for external funding in the form of equity, debt, donations and monetary or non-monetary rewards to support entrepreneurial projects with different objectives (e.g. artistic, creative, cultural, social and technological).

Substantial funds can be raised by collecting small contributions from a large group of funders (i.e. leveraging a network of multiple actors through internet-based platforms), thus enabling access to capital (Bitterl and Schreier, 2018). In addition to being a source of funding, the process of crowdfunding allows new ventures to gain customers and seek feedback about their business model or ideas while interacting with potential funders (Neuhaus et al., 2021; Junge et al., 2022).

Over the past few decades, various crowdfunding platforms have emerged, including reward-based (Roma et al., 2017), equity-based (Battisti et al., 2022; Miglietta et al., 2019), debt-based (Boudreau et al., 2021) and donation-based crowdfunding platforms (Salido-Andres et al., 2021). Reward-based platforms provide funders with an advanced version of the product(s) (Baber and Fanea-Ivanovici, 2021), while equity-based platforms give funders an equity stake (Bade and Walther, 2021; Vrontis et al., 2021). Debt-based platforms allow entrepreneurs access to micro-loans. Finally, donation-based platforms leverage the non-pecuniary motivation of the crowd while accessing donations (Boudreau et al., 2021) and soliciting funding for a charitable cause (Salido-Andres et al., 2021). Overall, the various models arguably have multiple benefits, including access to new entrepreneurial opportunities and networks (Vismara, 2018b), brand building (Sabia et al., 2022), customer engagement (Bitterl and Schreier, 2018) and the evaluation of a business idea (De Luca, 2019; Shang et al., 2020).

Despite the increasing relevance of crowdfunding in new ventures (Bruton et al., 2015), it is unclear how it differs from traditional sources of entrepreneurial finance. Existing studies do not offer much clarity on the concept of crowdfunding and how it links to new ventures. Similarly, we lack clarity regarding the motivation of the different crowdfunding participants and the crucial role of, for example, founders, institutions and geography in driving the success of crowdfunding in support of new ventures (Bade and Walther, 2021). Specifically, the following unanswered questions require immediate attention: How does crowdfunding differ from traditional finance sources as a driver of new-venture success? What factors influence new ventures to embrace crowdfunding? What challenges do entrepreneurs in new ventures face when sourcing resources through crowdfunding platforms? How do different crowdfunding models influence the continued existence and growth of new ventures? Thus, in addition to lacking clarity on why new ventures adopt a particular form of crowdfunding, we also lack a sense of the drivers and outcomes of crowdfunding in the context of new ventures.

As scholarly research in the field of crowdfunding is still nascent and fragmented (Mochkabadi and Volkmann, 2020), scholars have attempted to review the available literature, summarize the current body of knowledge and identify various research gaps. For example, Bouncken et al. (2015) elucidated basic crowdfunding concepts based on a review study, and Neuhaus et al. (2021) reviewed the ambiguous relationship between crowdfunding success and the personality traits of entrepreneurs. Paoloni et al. (2019) reviewed the crowdfunding literature regarding small firms and noted that prior studies have focused on crowdfunding models, investor behavior and the role of crowdfunds in small firms. Böckel et al. (2021) systematically reviewed the literature on the intersection of crowdfunding and sustainability, while Mochkabadi and Volkmann (2020) systematically reviewed the equity crowdfunding literature and identified predominant themes (i.e. capital markets, entrepreneurs, institutional perspectives and platforms).

While we observed that there are recent literature reviews examining various aspects of crowdfunding, to our understanding, no existing literature review specifically examines the linkages between crowdfunding and new ventures. This study, therefore, aims to offer a systematic literature review (SLR) that specifically examines the prior extended literature on the role of crowdfunding in the context of new ventures. We aim to answer three key questions (RQs). RQ1: What is the research profile of prior literature examining crowdfunding in new ventures? RQ2: What are the research themes in the extant literature on crowdfunding in new ventures? RQ3: What are the key knowledge gaps in the extant literature, and what potential research avenues remain unexplored?

The current study answers these questions by systematically mapping and assessing the existing literature on crowdfunding in the realm of new ventures (Tranfield et al., 2003). We followed the SLR methodology suggested by prior literature reviews (Kaur et al., 2020; Moleskis et al., 2019) and carefully analyzed 58 academic articles published in journals at the intersection of crowdfunding and new ventures. We present findings related to the progress of publications, predominant publication outlets and methodologies applied. In addition, based on a thematic analysis, we elucidate six predominant themes: a) founders and crowdfunding, b) signaling and crowdfunding, c) digitalization and crowdfunding, d) outcomes of crowdfunding, e) geography and crowdfunding and f) success factors.

The current study offers the following contributions. First, as previously established, there are no existing reviews of the literature on the relationship between crowdfunding and new ventures. As a result, scholars and practitioners face difficulties in gaining a comprehensive overview of the field. We apply the best practices of systematic review to ensure transparency and replicability. Second, we analyze prior literature on crowdfunding and new ventures' evolution, identifying deployed methodologies and elucidating predominant themes in the extant literature. Third, we contribute to the current research on the intersection of crowdfunding and new ventures by identifying six themes. Finally, the findings revealed that new ventures should build their campaigns using the right signals and appropriate digital platforms, informing managerial practice. The present study's overview of current understandings of crowdfunding will hopefully aid scholarly research and managerial practices in the design and implementation of crowdfunding campaigns.

Our study is structured as follows. We first describe the review strategy, in Section 2, before summarizing the relevant literature on crowdfunding. In Section 3, we explain the methodology and then provide a descriptive analysis of the current crowdfunding research. We then provide the findings of our thematic analysis in Section 4 and suggest potential avenues for future research. We present our conceptual framework in Section 5 and conclude in Section 6 by discussing our findings and implications and the limitations of our study in Section 7.

2. Types of crowdfunding models

Scholars recognize that new ventures often face numerous challenges in attracting external financing through debt or equity (Belleflamme et al., 2014). Entrepreneurs have begun to circumvent the financing problem in a venture's early stage by employing crowdfunding and tapping the large volume of funders who become closely involved in new ventures as consumers and investors. The genesis of crowdfunding can be found in the practice of crowdsourcing, which involves leveraging resources from the crowd to obtain new ideas (Estellés-Arolas and González-Ladrón-De-Guevara, 2012).

Crowdfunding refers to the practice of new ventures attempting to raise funds by drawing on contributions from a crowd without relying on financial intermediaries (Belleflamme et al., 2014); they thus obtain financial resources through a crowd rather than professional parties. Deployment of blogs, podcasts, social networking sites and other internet-based technologies are prerequisites to successful crowdfunding.

New ventures have adopted various forms of crowdfunding (including those based on reward, equity, debt and donations; Shneor and Vik, 2020). Reward-based crowdfunding is rooted in charity and philanthropic resource commitment (Roma et al., 2021). It helps new ventures engage with many backers (Cox and Nguyen, 2018). Scholars agree that personal networks of entrepreneurs and project quality are associated with successful reward-based crowdfunding (Mollick, 2014). For example, investors may offer funding in exchange for non-monetary benefits, such as recognition in society (Frydrych et al., 2014; Shneor and Vik, 2020) and reciprocity (Smith, 2017). While such crowdfunding campaigns engage the crowd by offering investors a discounted product, the sense of social belonging is often a crucial motivator in successful reward-based crowdfunding (Steigenberger, 2017). The benefit for new ventures is they can gather the initial capital required in their early stages. This type of crowdfunding usually involves the development of consumer products and services while co-creating value with backers through feedback (Giudici et al., 2022). The benefit for consumers is they are able to order the product at a discounted price (Belleflamme et al., 2014); the pitfall is that customers are unable to secure information from new ventures prior to making an investment decision.

Equity crowdfunding is another type of crowdfunding that enables new ventures to obtain funds by offering equity to the crowd (Coakley et al., 2022; Troise and Tani, 2020). It involves investment decision-making; that is, the crowd buys an equity stake by taking risks and making investment decisions (Mochkabadi and Volkmann, 2020). However, since investors in the crowd are less experienced and handicapped by high information asymmetry, equity-based crowdfunding carries a greater risk than other forms of crowdfunding (Mochkabadi and Volkmann, 2020). As such, scholars agree that risk reduction measures (e.g. investor education and third-party judges) are needed to evaluate projects. Our understanding of the drivers and outcomes of equity crowdfunding campaigns remains limited (Coakley et al., 2022).

Debt-based platforms account for a major share of crowdfunding volume across the globe (Böckel et al., 2021; Junge et al., 2022). Debt-based crowdfunding models involve individuals or institutional funders that provide loans to new ventures (Shneor and Vik, 2020). It involves investors giving microloans to entrepreneurs and seeking a return, with interest, on the original investment (Short et al., 2017). Existing studies have explored the role of the signals that shape the crowd's investment decisions (Moss et al., 2015).

Finally, donation-based crowdfunding campaigns entail funders donating to a cause without expectation (Salido-Andres et al., 2021; Boudreau et al., 2021). In donation-based crowdfunding, donors often support new ventures for altruistic reasons, for example, supporting ventures focused on sustainability. The macro drivers of donation-based crowdfunding campaigns are the digital literacy and social capital of fund-seekers and other economic factors (Salido-Andres et al., 2021). Figure 1 illustrates the four predominant crowdfunding models.

3. Method

Systematic reviews have gained acceptance across many disciplines (especially management) because they enhance research rigor (Dorn et al., 2016) and evidence-based research (Tranfield et al., 2003). The SLR is important for understanding the state of research in a given field and is an appropriate method for acquiring an overview of research (Snyder, 2019). SLRs have an advantage over traditional reviews as they apply a predefined protocol to search and analyze existing literature, ensuring transparency and replicability (Battisti et al., 2021; Crous et al., 2022; Siddaway et al., 2019). In addition, they offer a suitable method to identify and analyze prior research in a specific domain and provide a methodology for conducting replicable and transparent reviews within a particular field (Behera et al., 2019). Specifically, SLRs (a) summarize current evidence on a topic, (b) delineate gaps and (c) propose a conceptual framework (Khan et al., 2021).

Our initial literature review did not identify any existing review of the literature on crowdfunding in the context of new ventures. Our study attempts to achieve the following: (a) perform a descriptive analysis of extant research on crowdfunding and new ventures, (b) identify and classify key themes and (c) set a future research agenda based on the identified research gaps.

To ensure objectivity in our approach, we followed a process consistent with previous systematic reviews (Tranfield et al., 2003) to review crowdfunding and new venture research. Specifically, we followed the following sequential steps: a) planning the review, b) performing data extraction, c) applying screening criteria and d) descriptive analysis.

3.1 Planning

First, we selected keywords relevant to the literature on crowdfunding and new ventures and then performed a preliminary search on Google Scholar using the terms “crowdfunding” and “new ventures,” evaluated the first 50 results and prepared an initial list of keywords. Consistent with earlier systematic reviews, we searched the leading journals on entrepreneurship – Entrepreneurship Theory and Practice, International Small Business Journal, Journal of Business Venturing, Journal of Business Venturing Insights, Journal of Small Business and Entrepreneurship, Journal of Small Business Strategy, the Journal of Small Business Management and Small Business Economics. We subsequently reviewed existing literature reviews to check whether we had missed any relevant keywords. The initial search results from Google Scholar, reputable entrepreneurship journals and keywords from prior systematic reviews revealed that the extant literature used the following additional terms as keywords: “crowdfunding,” “microlending,” “microfinance,” “peer-to-peer lending,” “new ventures,” and “start-ups.”

3.2 Data extraction

We conducted our SLR by searching for peer-reviewed academic articles in the Scopus and Web of Science (WoS) databases (Sahu et al., 2020). The Scopus database was selected due to its greater coverage of management articles (Theodoraki et al., 2022), while the WoS database was selected due to its extensive coverage of peer-reviewed articles, ensuring the quality and diversity of the returned research articles (Fernandes and Ferreira, 2022). After ensuring the exhaustiveness of our search (see Section 3.1), we used the following combinations of specific keywords: (“new firm*” OR “new venture*” OR “new business*” OR “start*” OR “founder*” OR “entrepreneur*”) AND (“crowdfunding*” OR “crowdfunding*” OR “microlending*” OR “micro-lending*” OR “microfinance*” OR “micro-finance*” OR “peer-to-peer lending*” OR “entrepreneurial finance*”). The search resulted in 1,681 documents obtained from Scopus and 1,618 documents from WoS.

3.3 Screening criteria

To guarantee transparency, we screened the documents obtained from Scopus and WOS using various inclusion and exclusion criteria (Figure 2). Specifically, we selected peer-reviewed empirical articles (written in English and published before February 2022) with “crowdfunding,” “new ventures,” and “start-ups” in their title, abstract, or author keywords. We then screened the titles and abstracts, removing duplicates and eliminating all the publications not directly or indirectly dealing with crowdfunding and new ventures; we note that while microlending, microfinance and entrepreneurial finance studies have examined crowdfunding, they often also consider other sources of funding). We only included studies that directly related to crowdfunding and new ventures and excluded studies that used terms like microfinance or entrepreneurial finance. The exclusion criteria helped us to condense our initial search and omit studies that had no direct relevance to crowdfunding in new ventures. Following prior SLRs, we also excluded reviews, conceptual studies, dissertations, conference proceedings, book chapters and editorials (Ferreira et al., 2022; Khanra et al., 2020). After reviewing the titles, abstracts and keywords, 58 relevant and unduplicated documents were selected for the current SLR. Figure 2 illustrates the steps followed.

3.4 Descriptive analysis

The selected studies (n = 58) were analyzed to generate a synopsis of the prior literature at the intersection of crowdfunding and new ventures. Specifically, we considered a) publication progress over the years, b) publication outlets and c) study research design. While research on crowdfunding began decades ago, our review suggests that research in the context of new ventures remains nascent. Nevertheless, there has a trend in the literature over the last six years linking crowdfunding and new ventures, with sixteen publications in academic journals in 2021. Figure 3 illustrates this year-wise publication trend (based on our selected studies).

The prominent publication outlets for topic-related publications were Small Business Economics (n = 8), Research Policy (n = 3), IEEE Transactions on Engineering Management (n = 3), Technological Forecasting and Social Change (n = 2), Venture Capital (n = 2) and European Management Journal (n = 2). Figure 4 illustrates the share of research in each of these.

We noted that scholars employed both quantitative techniques (e.g. field surveys and experiments) and qualitative techniques. However, the predominance of quantitative methodology was surprising given that crowdfunding is a new phenomenon, and initial qualitative analysis is required to explore the phenomenon. Figure 5 illustrates the methodology employed by our selected studies.

Finally, we also noted that scholars have employed a variety of theoretical lenses, for example, the theory of social capital (Cai et al., 2021) and signaling theory (Ahlers et al., 2015), to understand how entrepreneurs in new ventures successfully access crowdfunding, how crowds react to information provided by entrepreneurs, and how they evaluate new venture ideas.

4. Thematic analysis

To illustrate the current landscape of crowdfunding research, we performed a thematic analysis (commonly used in qualitative research) to summarize the extant literature and identify common themes. This approach has gained prominence in SLR studies because it allows for extracting key themes and identifying research gaps (Gaur and Kumar, 2018). Our understanding of the studies selected was informed by their stated aims, propositions or hypotheses, results, discussion and conclusions. Following a two-step process (Gaur and Kumar, 2018), we coded 58 articles via open coding using Microsoft Excel. To ensure transparency and replicability, we followed the systematic procedure outlined by Gioia et al. (2013) to identify the themes.

These first-order codes reflected core ideas and arguments and subsequent axial coding (Corley and Gioia, 2004) identified the following predominant themes: a) founders and crowdfunding, b) signaling and crowdfunding, c) digitalization and crowdfunding, d) outcomes, e) geography and crowdfunding and f) success factors. Figure 6 illustrates these key themes that emerged during thematic analysis.

4.1 Founders and crowdfunding

Since founders shape a crowdfunding campaign and are responsible for presenting the project to the public, research often focuses on the characteristics of founders that influence crowdfunding campaigns. Successful crowdfunding can be related to the founder's motivations and personality (Bollaert et al., 2020) or the founder team's human capital and commitment (Coakley et al., 2021). For example, Coakley et al. (2021) theorized that founder teams (rather than single founders) are more likely to achieve crowdfunding success due to the quality of human capital. Specifically, the founding team's structure can be a crucial antecedent of crowdfunding success; the team's human capital can attract professional investors; the risk of failure is lowered by professional investors performing a monitoring role.

Boudreau et al. (2021) reported that the ability of a new venture's founder to address their non-pecuniary motivation is a crucial driver of donation-based crowdfunding success. In their Bangladesh-based study, Islam and Khan (2021) examined the factors driving the intention of new venture founders to seek crowdfunding. The findings illustrate that performance expectation, facilitating conditions and social influence significantly impact the decision to adopt crowdfunding. In contrast, trust was not found to be a significant determinant. Bollaert et al. (2020) theorized that narcissistic founders are less likely to achieve successful crowdfunding partly because they are likely to set up lower performance goals and plan longer campaigns, and partly because funders are reluctant to support narcissistic founders.

While we noted that the extant research explored these founder-related characteristics, a research gap remains regarding the role of the founders. First, we lack clarity on crowdfunding's challenges, for example, psychological stress and how founders cope with those. How the founder's personality, gender, social network and geographical location influence the success or failure of a crowdfunding campaign (Bollaert et al., 2020) is another area of interest.

We, therefore, propose the following research questions. RQ1: How does a founder's personality (i.e. their “bright and dark sides”) affect crowdfunding outcomes in the context of new ventures? RQ2: In terms of finance sourcing, what motivates new venture founders to opt for different types of crowdfunding, and how does their (founder and/or founding team's) prior knowledge influence crowdfunding outcomes? RQ3: How does the gender of the founder influence crowdfunding outcomes? RQ4: How does the geographical distance between new venture founders, investors and the location of founders in clusters influence crowdfunding outcomes? RQ5: What role does a new venture founder's social network play in successful crowdfunding outcomes?

4.2 Signaling and crowdfunding

Beyond the founder-related factors, the literature review revealed the crucial role of signaling (Ahlers et al., 2015; Pabst and Mohnen, 2021; Kaminski and Hopp, 2020) in crowdfunding success. Signaling theory posits that the behavior of recipients depends on how the sender transmits signals and how the recipients interpret those (Kromidha and Robson, 2016).

Scholars have highlighted how new ventures send signals regarding the quality of their start-ups’ to potential investors, mitigate information asymmetry concerns and support crowdfunding success (Vismara, 2018a). For example, Korzynski et al. (2021) explored whether impression management techniques helped ventures to attract crowds and meet their financial targets. They reported that the appearance of being “skillful” and “hardworking” is likely to result in crowdfunding success. In contrast, intimidation (using threats) was negatively related to successful crowdfunding. Song et al. (2019) revealed that having several campaign contributors signaled the high quality of the start-up and resulted in crowdfunding success.

While considering linguistic style as a driver of crowdfunding campaign success, Kaminski and Hopp (2020) noted that positive psychological language enabled crowdfunding success (despite inherent uncertainties and a lack of objective information). Their findings emphasized the crucial role of positive psychological language when objective information is scarce. Further, they showed that the availability of relevant information could assist backers in forming expectations and believing that founders possess the necessary skills and knowledge to manage the project.

In their study on the behavioral orientation of founders, Calic et al. (2020) found that entrepreneur's signals of “proactiveness” had a positive relationship with crowdfunding success, whereas signals of “autonomy,” “competitive aggressiveness,” “innovativeness,” and “risk-taking” had an inverted-U-shaped relationship with crowdfunding success. Piva and Rossi-Lamastra (2018) found that a new venture founder's human capital (e.g. education and experience) signals the high quality of a new venture. Pabst and Mohnen (2021) highlighted how investment in signals (e.g. patents) enabled the funder's contribution to the new venture. The findings highlight the correlation between investment in signaling and crowdfunding success. Finally, Kleinert et al. (2021) examined how equity-based crowdfunding platforms employ signals to identify new ventures seeking funds. The findings revealed that patents, prior experience, prior venture capital backing and sales agreements had an impact on a proposed project being supported.

Despite a growing literature on the role of signaling in shaping crowdfunding success, certain research gaps remain (Kleinert et al., 2021; Pabst and Mohnen, 2021). It is important to understand how the crowd evaluates new ventures, how crowdfunding platforms accept or reject applications for new ventures, and how crowdfunding platforms address concerns or issues about information asymmetry. We propose the following research questions. RQ1: How do crowds evaluate investment opportunities in new ventures? RQ2: How does signaling influence crowdfunding success in new ventures? RQ3: How does the interpretation of signals vary based on investor age in the context of new ventures? RQ4: How do new venture founders build and maintain trust during crowdfunding campaigns by employing signals? RQ5: How do entrepreneurial passion and soft skills signal the quality of a new venture?

4.3 Digitalization and crowdfunding

Digitalization is another relevant factor in driving campaign success (Salido-Andres et al., 2021). The emergence of internet technologies, such as podcasts, blogs and social networking websites has alleviated concerns about the cost of capital and democratized access to funds (Salido-Andres et al., 2021). Gupta et al. (2019) examined how digital ventures support knowledge acquisition while successfully transforming their business models. The authors pinpointed the crucial role of strategic learning in transforming the business model. Their findings revealed that digital infrastructure curtails the cost of setting up new projects and provides easy access to new knowledge. Eiteneyer et al. (2019) theorized that reward-based platforms provide digital opportunities to engage with customers, which, in turn, results in product innovation.

The digital platform thus effectively connects investors with new ventures across geographies (Hendratmi et al., 2020). Gupta and Bose (2022) theorized the crucial role of the external environment in facilitating the digital business transformation of crowdfunded entrepreneurial ventures. Finally, based on an analysis of videos using artificial intelligence, Korzynski et al. (2021) found that impression techniques can help new venture backers during crowdfunding campaigns and assist them in meeting their financial targets.

Despite scholarly interest in the crucial role of digital technologies in the crowdfunding success of new ventures, certain gaps remain. It is unclear how new ventures engage with the digital crowd or how digital communication tools influence the crowdfunding success of new ventures. We lack clarity on both the role that online (crowd) feedback plays as a driver of crowdfunding success and the role of organizational learning as a driver of digital business transformation. We thus propose the following questions. RQ1: How do new ventures engage and co-create with the digital crowd? RQ2: How does strategic learning influence the digital transformation of new ventures that are being crowdfunded? RQ3: How does online feedback influence the success of donation-, equity- and reward-based crowdfunding projects of new ventures? RQ4: How do new ventures engage the digital crowd to leverage product innovation opportunities? RQ5: What role does strategic learning play in the transformation of digital business models?

4.4 Outcomes

Extant literature posits various crowdfunding benefits for new ventures, including access to feedback (Shahab et al., 2021), access to networking (Salido-Andres et al., 2021), fulfilling legitimacy concerns of new ventures (Frydrych et al., 2014) as they face potential barriers due to newness (Lehner and Nicholls, 2014), market validation (Sabia et al., 2022), brand awareness (Sabia et al., 2022), sales (Bitterl and Schreier, 2018) and subsequent investment from venture capitalists (Roma et al., 2021). For example, Fourati (2017) described crowdfunding as a screening tool that helps new venture founders improve their informational environments and limit problems of moral hazard.

In addition, successful crowdfunding campaigns can mitigate uncertainty regarding product acceptance in the markets. Eiteneyer et al. (2019) noted that crowdfunding networks allow the involvement of backers in product innovation. Their findings indicated that the involvement of a crowd in product development mediates the relationship between community-derived social capital and the product innovativeness of new ventures. Shang et al. (2020) posited that funders' monitoring of crowdfunding projects positively impacts product innovation, and this relationship is mediated by financing performance. Barrales-Molina et al. (2021) found that there is a higher likelihood of patenting in new ventures when these are located in clusters financed through crowdfunding. Roma et al. (2021) found that engagement in crowdfunding campaigns allows new ventures to access funds from venture capitalists in the later stage of funding. The findings also revealed that venture capitalists rely on the crowd in making decisions regarding investments in new ventures.

Finally, despite increasing evidence on the potential benefits of crowdfunding, there is a need to further explore the role of crowdfunding in the success of new ventures. It is crucial to understand how successful crowdfunding influences post-campaign performance outcomes. Furthermore, it is important to explore how crowdfunding platforms evaluate new ventures (before supporting them) and to identify what benefits new ventures leverage by using these platforms. We thus propose the following questions. RQ1: What are other potential benefits of crowdfunding beyond access to funding? RQ2: How do crowdfunding platforms select and evaluate new ventures in terms of their innovativeness? RQ3: How does crowdfunding enable the brand-building of new ventures?

4.5 Geography and crowdfunding

Geography or location is often theorized as a crucial driver of crowdfunding success (Giudici et al., 2022). New venture founders tend to cluster in the geographies where crowdfunding communities are located since this proximity may reduce information asymmetry (Noonan et al., 2021). Giudici et al. (2020) observed a relationship between geographical proximity and the probability that investors will participate in a new venture's funding campaign. Their findings revealed that geographic proximity allows new ventures to leverage their social capital while attracting contributions from the local community. Bade and Walther (2021) reported that the role of location is more pronounced for younger start-ups. They further pointed out that, as a result of limitations on their capacity to process information, investors are more likely to pay attention to crowdfunding campaigns in local geography.

Although there has been a heightened interest in geography as a driver of crowdfunding, there is little clarity on the uneven success of crowdfunding across geographies (i.e. why new ventures enjoy crowdfunding success in particular regions). It is important to understand how the characteristics of a geographical area drive crowdfunding success (Giudici et al., 2022). It is also important to better understand how distance and social ties influence the flow of crowdfunding, and we propose the following questions for future research. RQ1: Why and how does geographical distance matter as a driver of crowdfunding success or failure in the case of new ventures? RQ2: How does geography influence nature of online feedback received by crowdfunding projects? RQ3: How does local culture impact the crowdfunding outcomes of new ventures (especially in terms of funders' willingness to invest in a particular type of crowdfunding)? RQ4: How can crowdfunding platforms mitigate the effects of distance and information asymmetry concerns between crowds and new ventures?

4.6 Success factors

After reviewing the selected studies, we noted several factors that support crowdfunding success. We found that entrepreneur-level factors, such as educational background, funding experience, gender, founder's motivation and commitment (Allison et al., 2017; Moleskis et al., 2019; Shafi, 2021) and various other factors, such as customer endorsement and regular campaign updates impact the success of crowdfunding by new ventures. Other drivers of crowdfunding success include the crowd's confidence in the new venture team, the attractiveness of the project and financial pledges by the founders (Feola et al., 2021).

Shahab et al. (2021) explored the role of feedback as an antecedent of venture success. Drawing on regulatory focus theory, the authors posited that online product feedback from the crowd is critical for shaping the success of a crowdfunding campaign. Boudreau et al. (2021) examined the factors influencing donation-based crowdfunding success and hypothesized that private gifts motivate funders to participate. Specifically, non-pecuniary motivation is crucial in motivating crowd participation. Eiteneyer et al. (2019) explored whether new ventures benefited from customer interaction and argued that the social capital of crowdfunding platforms facilitates the involvement of backers as co-developers, resulting in new product development – that is, crowdfunding platforms provide infrastructure for knowledge creation.

Gaining legitimacy may also be a crucial driver of resource acquisition by new ventures (Frydrych et al., 2014); the online reputations and brand communities of new ventures may be the attraction for investors. Shahab et al. (2021) noted the crucial role of online feedback from the crowd as a driver of crowdfunding success.

Although the factors influencing crowdfunding success have been considered in a range of studies, there is no clarity on how new ventures build their legitimacy during crowdfunding projects. There is a need to explore the legitimacy creation process and its effects on the success or failure of crowdfunding projects and to better understand the drivers of resource commitment across various types of crowdfunding projects (on the country and industry level) for new ventures. Another area requiring study is social media as a driver of crowdfunding success. We thus propose the following research questions. RQ1: What role does social media play as a driver of crowdfunding success in new ventures? RQ2: Do crowdfunding platforms enable new venture founders to gain legitimacy? RQ3: What potential factors influence the acceptance and rejection of crowdfunding applications for new ventures? RQ4: How do crowdfunding platforms address information asymmetry issues in new ventures? RQ5: How does community-derived social capital result in the development of products by new ventures?

5. Conceptual framework

In our proposed conceptual framework, we discuss the drivers and outcomes of crowdfunding in the context of new ventures (see Figure 7). Based on the thematic analysis of selected studies, we propose two dominant antecedents of successful crowdfunding: a) founder-related antecedents and b) campaign-related antecedents. Specifically, we theorize that the founders play a crucial role in crowdfunding success, with founder-related antecedents of crowdfunding including motivation (Junge et al., 2022; Troise and Tani, 2020), prior experience, gender (Frydrych et al., 2016; Moleskis et al., 2019) and personality of the new venture founders (Bernardino and Santos, 2016; Christopher Courtney, 2017) being relevant. We further theorize that institutional, social (Pabst and Mohnen, 2021) and geographical contexts (Ahlers et al., 2015) shape founders' pecuniary and non-pecuniary motivations to engage in crowdfunding. We also propose campaign-related antecedents, including digitalization (Luqman et al., 2021; Mastrangelo et al., 2020) and signaling strategy (Coakley et al., 2022; Korzynski et al., 2021).

As discussed, our literature review revealed that engagement with the crowd plays a crucial role in driving crowdfunding success. As potential investors and donors are handicapped by information asymmetry in decision-making, we theorize that the right signaling by founders may be crucial to negate the impact of information asymmetry (Kleinert et al., 2021). Investors are inclined to invest in local projects that mitigate these concerns (Bade and Walther, 2021) and we thus theorize that geography plays a crucial role in crowdfunding success. Signaling allows new ventures to gain the crowd's backing and access to funds (Korzynski et al., 2021). Specifically, it is necessary to compare how the future-focussed campaign design enables crowdfunding success (Lin et al., 2021).

Our review of the selected studies illustrated that digital technologies (Chandna, 2022) and a venture's geography (Gallemore et al., 2019) influence crowdfunding outcomes and the resultant investment in new ventures. We theorize that digital technologies enable information exchange and allow new ventures to transform their business models based on crowd feedback (Gupta and Bose, 2022). Finally, we theorize that a new venture's crowdfunding efforts allow it to leverage new opportunities (Eiteneyer et al., 2019). The potential outcomes include brand awareness (Maier et al., 2021), customer feedback (Mastrangelo et al., 2020), legitimacy (Stanko and Henard, 2016), product development (Stanko and Henard, 2016) and product innovation. Figure 7 illustrates the proposed conceptual framework.

6. Discussion

Our study took stock of the current knowledge on crowdfunding success in the context of new ventures. We followed a systematic approach (Tranfield et al., 2003), analyzing 58 articles to discuss factors that impact the crowdfunding of new ventures. We sought to make contributions to the field by answering three research questions.

RQ1 pertained to the research profile of the existing literature on crowdfunding of new ventures. Our findings revealed that this research is still developing. The assessed the relevant articles obtained from Scopus and WoS databases and highlighted the sample's year-wise publication progress, methods, findings and research gaps. We further noted that extant research employed both qualitative and quantitative methods.

In terms of emerging themes in the crowdfunding literature (RQ2), we identified six predominant themes: founders, signaling, digitalization, outcomes, geography and success factors. Specifically, the thematic analysis revealed that founders of new ventures play a crucial role in successful crowdfunding (Shafi, 2021; Bollaert et al., 2020; Coakley et al., 2022). Their characteristics are crucial to crowdfunding success in that they can reduce information asymmetry between the crowd, backers and new venture founders. Crowdfunding platforms could thus improve the success of projects by focusing more on the human capital of the founder team, thereby mitigating the impact of the inherent information asymmetry.

In addition to highlighting the crucial role of entrepreneurial personality in crowdfunding outcomes, we noted that crowdfunding offers an opportunity to pre-test the market potential of a product before going live and allows new venture founders faster and easier access to financial resources. The thematic analysis revealed the role of signaling as a driver of crowdfunding success. To promote themselves and make the audience aware of their talents, founders may detail their past experiences in different industries, thus exhibiting how they were previously successful while using an appropriate tone to express their excitement and commitment. While intimidation should be avoided as a signaling technique, endorsement by third parties has potential.

New venture founders wanting to successfully leverage the benefits of crowdfunding successfully must also address the issues of information asymmetry. Digitalization is crucial as it provides an opportunity for users to play an important role. Digital technologies allow new venture founders to get user feedback, build a brand, book orders in advance (Sabia et al., 2022) and develop new business models (Ahlers et al., 2015). Finally, we noted that crowdfunding success is dependent upon geographical context (since the ability to draw capital varies across geographies) (Dejean, 2020).

6.1 Theoretical implications

The current study has the following implications for theory. First and foremost, it offers evidence that crowdfunding and new ventures are understudied, and the extant literature is disjointed. Seeking to resolve these limitations, we add to the current literature by providing a comprehensive picture of the literature on crowdfunding while differentiating crowdfunding from other sources of entrepreneurial finance. To the best of our knowledge, our study is one of the earliest to compile and analyze the key findings of the existing literature on the intersection of crowdfunding and new ventures. We provide an overview of the relevant literature and identify research questions for future scholarship.

Second, our review of the literature revealed that crowdfunding encompasses a mix of operating and strategic decisions (Belleflamme et al., 2014). At the strategic level, crowdfunding is a strategic decision as it meets the founder's need to raise funds for new ventures, compare the cost of capital and obtain feedback on their business idea. At an operational level, crowdfunding affects sales based on the pricing strategy of the type of crowdfunding employed.

Third, we add to the extant literature on signaling (Roma et al., 2021; Christopher Courtney, 2017). Appropriate signaling is a crucial driver of crowdfunding success and is important to investors – especially in mitigating concerns of information asymmetry and enabling the crowd to screen campaign-related information, including deciphering entrepreneurial personalities and the nature of the venture. Likewise, patents and characteristics of founding teams are signals valued by investors.

Fourth, our findings suggest that the venture founder, including their personality (Chandler et al., 2021; Bollaert et al., 2020) and motivation (Mastrangelo et al., 2020), are important in shaping crowdfunding success. The key point is that founder teams are more successful (since their human capital allays information asymmetry concerns).

Fifth, we propose a conceptual model elucidating the drivers, enablers and outcomes of crowdfunding (Nespoli et al., 2022). Beyond financial outcomes, the findings revealed that other outcomes of successful crowdfunding campaigns include customer awareness (Sabia et al., 2022), legitimacy (Lehner and Nicholls, 2014; Stanko and Henard, 2016), market validation (Pietro, 2021) and new investments (Roma et al., 2021). Our findings also exposed several drivers of successful crowdfunding – the crucial role of new venture founders, signaling, internet technologies and geography. Other success factors included communication, effective presentation, human capital and product characteristics. Finally, we suggested avenues for future research.

6.2 Practical implications

The study findings have various implications for practice. First, finance is an important factor in support of new ventures. Internet-based crowdfunding platforms may enable new venture founders across geographies to overcome barriers that impede their ability to attract capital.

Second, the choice of crowdfunding strategy depends on the founders' funding needs. When funding needs are low, the founders of a new venture might prefer reward-based crowdfunding. Then, as their funding needs increase, they can transition to profit-sharing through equity-based crowdfunding. New venture founders may retain equity and provide information about equity that is owned by those in the founding team – an effective signaling strategy in crowdfunding campaigns.

Third, various factors that may impact campaign success (e.g. founder-related factors and signaling) can inform new ventures in building successful campaigns. Our findings suggest that the presentation of objective information by new ventures (e.g. financial projections and future roadmaps) can increase the likelihood of crowdfunding success. In addition, board structure and the use of multiple social media platforms may enhance the prospect of crowdfunding success and help founders successfully manage their crowdfunding programs (Korzynski et al., 2021). Hence, our study's findings can inform specific aspects related to the design of crowdfunding campaigns and also enable the management and governance of digital crowdfunding platforms.

Fourth, as investors pay more attention to local campaigns, new venture founders need to leverage location benefits. To negate issues related to information asymmetry, start-ups need to locate themselves in densely populated areas. Funders can then be motivated to participate in projects by fulfilling their non-pecuniary motivations.

Fifth, the potential role of crowdfunding in enabling the collective development of a business idea is another potential implication (Frydrych et al., 2014). Reward-based crowdfunding provides an opportunity to co-develop and co-promote a business idea with investors.

Finally, the current study's findings may serve educators in teaching entrepreneurship or entrepreneurial finance or training participants on the design and promotion of crowdfunding campaigns. Specifically, there is a need to educate stakeholders on the role of venture founders, signaling and digitalization as drivers of crowdfunding campaigns' success.

7. Conclusions, limitations and future works

The current study systematically reviewed the extant literature on crowdfunding, identifying gaps and providing suggestions for future research. Despite its contributions, the study has certain limitations. First, our keywords may not have been exhaustive, and it is possible that relevant studies were not considered. Second, the literature search was limited to two databases (i.e. Scopus and WoS). Although both are reputable, we may have missed relevant publications on crowdfunding and new ventures. Third, following prior SLRs, we only considered peer-reviewed articles, excluding book chapters, conference presentations, conceptual papers and systematic reviews. Lastly, we only included publications written in English (thus excluding all articles published in other languages).

Despite these limitations, our SLR illustrates the evolution of crowdfunding in new ventures. Future research needs to expand on this overview of crowdfunding research and should include other methodologies (e.g. topic modeling and bibliometric studies). Since crowdfunding has gained popularity as a funding alternative for new ventures, further analyses of determinants predicting campaign success might be useful. There is also a need to explore whether signals associated with campaign success predict the overall performance of new ventures. Other highly relevant topics for future research include the pre-selection processes and risk-mitigation measures of crowdfunding platforms. Furthermore, since the extant research on crowdfunding in new ventures relied on signaling theory (while ignoring new theoretical concepts), future studies should consider diverse methodical approaches; this will advance rather than simply test existing theoretical knowledge. Finally, as crowdfunding activity increases, academics need to provide a solid base of knowledge for policymakers, who, in turn, need to formulate rules to protect the legitimate interests of different stakeholders. The advancement of crowdfunding knowledge will depend on new empirical and theoretical research and on resolving crowdfunding challenges across geographies. In brief, our findings may help inform the design of crowdfunding campaigns by crowdfunding platform services.

Figures

Figure 1

Four types of traditional crowdfunding models discussed in the literature

Figure 2

Systematic literature review process and criteria of the current study

Figure 3

Selected studies year-wise publication trend

Figure 4

Prominent publication outlets: share of selected studies on crowdfunding and new ventures

Figure 5

Methodology of selected studies on crowdfunding and new ventures

Figure 6

Key themes of the selected studies on crowdfunding and new ventures

Figure 7

Conceptual framework on crowdfunding in new ventures