Basic Types of Project Initiators: Contributor Relations in Platform-Based Online Crowdfunding

Basic Types of Project Initiators: Contributor Relations in Platform-Based Online Crowdfunding

Javier Vidal-García (University of Valladolid, Spain) and Marta Vidal (Complutense University of Madrid, Spain)
Copyright: © 2016 |Pages: 15
DOI: 10.4018/978-1-4666-9604-4.ch008

Abstract

Crowdfunding has helped many businesses and projects to take off easily and is replacing the traditional methods of fundraising since more platforms are being created. Evaluation of the risk for both the borrower and the donor is important before investing or borrowing to ensure that the project is a success. Crowdfunding is changing the way that projects and startups get funded. Most of crowdfunding money is raised on reward-based platforms, although equity crowdfunding is growing quickly. It can be expected that crowdfunding will become more popular, with many crowdfunding new opportunities available, which will make not easy for potential investors to choose what to support. In this chapter, we introduce the reader to the basic types of project initiators-contributor relations in online crowdfunding. We review the current literature identifying the research questions relevant for our purpose. We subsequently conduct a research method of systematic review to identify the relevant papers that address those research questions.
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Background

Although the name of crowdfunding and its use of the Internet are new concepts to the market and the population, it is usually mentioned that the construction of the Statue of Liberty’s Pedestal took up the same idea. John Pulitzer, who was then a publisher, used his newspaper to rally up people donate money for the construction of the Pedestal, a project that later raised 100.000 dollars in six months. Pulitzer raised a fund and promised to print the identity of each donor, regardless of the amount of the donation. In August 1885, Pulitzer was finally able to announce that he had raised the final $100.000 for the statue’s pedestal. The next year the Statue of Liberty, which had arrived from France packed in crates, was erected on top. (See Young, 2013 for more details). Crowdfunding is becoming hugely popular in many parts of the world and the Internet platforms that are being used for contributions are on the rise.

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