A Magical Tool for Social Entrepreneurship: Crowdfunding

Introduction

In recent years, crowdfunding has become a new way for entrepreneurs to request financing in order to put their ideas and business plans into effect. Crowdfunding platforms such as Kickstarter, GoFundMe, and Indiegogo were introduced in order to host and mediate fundraising campaigns. Numerous reports about financing achievements of those who have had success using them have made such platforms very popular, and the growing interest from all kinds of entrepreneurs and investors has attracted participants to these platforms. Although it is relatively easy to create a project on these platforms, it is quite difficult to achieve the funding goals. There are many factors that may affect the results. For example, those things that may help increase the success rate of content creators is having previous experience, being able to promote the product on social media, using the right language describe the project, and the design of the reward package. For crowdfunding, all projects are shown to the backers on the online platform (Apostolos and Ioannis, 2012; Lin et al., 2018 ; Allon and Babich, 2020).

Crowdfunding can be used for supporting projects in the sciences and in many other fields. By using social media channels, a large number of micro-investors can be quickly reached. Social media such as Facebook, Twitter, YouTube, Flickr, and Tumblr make it possible to reach and link to thousands of media site for the project in way that is faster and more efficient than using traditional media. It thus is really important to take advantage of common interests in order to include investors in the platform environment. In the social sciences, crowdfunding has attracted significantly more interest recently. The advantages of crowdfunding for cultural organizations are quite clear, and the organizations does not constitute an exception. Crowdfunding also allows entrepreneurs to raise funds through an open call on the Internet. Perhaps the most important feature is the extra unique benefits that funders (i.e., “crowdfunding”) enjoy by participating in the crowdfunding mechanism. These additional unique benefits vary with an equity-based model, profit-sharing scheme, and crowdfunding forms ranging from lending to direct donations. While crowdfunding can take different forms, there is little academic understanding of the economic factors that determine an entrepreneur's choice of a particular form of crowdfunding (Belleflamme et al., 2014). From social entrepreneurship, all the concepts discussed in this section will also give clues about the new economic period in the world undergoing a change in the shadow of the pandemic as an extension of popular culture and technological developments.

Crowdfunding is a suitable alternative method for other institutions and individuals who are not actively involved in a country's capital market. In traditional financing models, there is a structure where labor and expenses are extremely high, and entrepreneurs need to hold dozens or hundreds of meetings in order to access finance. In a sense, it centralizes available investment opportunities by enabling data access. Thus, mass investment portals allow the information of early-stage businesses to be quickly transferred to potential investors. Crowdfunding system is also an effective system for investors. In the crowdfunding literature, backers observe and are aware of decisions from other backers and are influenced by their behavior (Bretschneider et. al., 2014). The concept was recently promoted as a way to help small businesses and entrepreneurs looking for investment capital to take their business ventures from scratch. Traditionally, investment advice is given by professionals such as brokers and investment consultants, based on clients' investment objectives and their level of sophistication. This system allows investors to search for many potential investment opportunities at once and access detailed information about them online. The new trend in the developing world is donation-based crowdfunding platforms that investors use to monitor innovative products and companies. It is known that social entrepreneurs have difficulties in maintaining the continuity of their initiatives that they started to create social value. For this reason, crowdfunding emerges as an essential tool for the sustainability of initiatives. Especially, the difficulties of new entrepreneurs in accessing resources and financial problems make crowdfunding an important alternative.