Equity crowdfunding: A qualitative assessment from the perspective of capable entrepreneurs.

Abstract

Prior research on venture funding has primarily focused on dyadic relationships between entrepreneurs and expert investors. Yet, in recent years, a new form of funding – equity crowdfunding – has emerged. This novel form of funding allows entrepreneurs to bypass traditional early-stage investors and seek equity directly from distributed crowds of non-expert investors. We develop an inductive model using grounded theory and the cognitive perspective. This model provides insights into the cognitive elements and mental roadmaps that occur in the ‘minds of entrepreneurs’ during the fund-seeking process. By explaining the source of these cognitions and their effects on behavior, our work contributes to the cognitive perspective of entrepreneurship as well as the scholarly understanding of venture funding in the modern era.