In Search of Crowdfunding Business Models

Introduction

Crowdfunding has significantly changed the rules of entrepreneurship, in particular in the face of the low propensity of banking institutions to finance either startups, or poor or young ventures. Since 2005, crowdfunding platforms have substantially increased. Even if the demand is far from being satisfied as seen by more than 2.5 billion financially excluded individuals, it is noticeable that competition is growing among existing platforms. Such platforms consequently need to look for competitive advantages that allow them to position themselves favorably against their competitors.

However, the theory of strategy and management of crowdfunding is far behind its rampant growth. Concepts and theoretical models have not sufficiently developed to accompany and support the crowdfunding websites’ entrepreneurs, strategists and managers. This shortcoming likely causes costs and failures, in particular due to the current state of increasing competitive pressure in the sector. The concept of a business model, despite its strategic theoretical and practical importance, is one of these concepts that suffer due to the absence of a reliable definition.

The term first appeared in the ABI/Inform database in 1975 (Zott & Amit, 2009). It became a prevalent buzzword since the emergence of the commercial Internet in the middle of 1990 (Leiner et al., 2014). The occurrence of the term in the academic papers skyrocketed since 1995. A search with the key term “business model” in Google Scholar (specialized for scholarly literature search) provides statistical evidence, as the Table 1 illustrates. For avoiding confusion and ambiguity, we searched in Google Scholar for papers that give some centrality to the concept of “business model” by putting it in the title (allintitle:“business model”).

Source: Google Scholar, checked on May 24, 2015.