One of the foremost innovations of recent years, crowdfunding is on a high. Not least because, unlike traditional financial options, reward-based crowdfunding lets entrepreneurs raise money to develop their projects without generating debt or relinquishing some control to a shareholder.
It also helps founders and entrepreneurs to check and consolidate their business ideas by getting feedback on prototypes and pricing directly from their future consumers or patrons.
By 2025, the total sum of funds raised by hopeful entrepreneurs via crowdfunding platforms will likely surpass $300 billion (CFX Alternative Investing Crowdfunding Statistics).
Interestingly, it is how you choose to pitch your idea and innovation that makes all the difference when raising high sums of capital. Projects that are more clearly altruistic or commercial have a lower success rate than “ambiguous” projects, which more or less intentionally mix philanthropic and market logics.
How does crowdfunding work and what is the optimal strategy for entrepreneurs to raise funds and for givers to donate to innovations?
Prof. Arthur Gautier, Executive Director of the ESSEC Philanthropy Chair, ESSEC Business School, shares his research into hybrid approaches to giving, with a focus on how reward-based crowdfunding platforms are shaking-up self-Interest vs. altruism.
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Crowdfunding: Win-win giving: The latest in an ongoing series of Council on Business & Society Research Pods – condensed learning capsules inspired from internationally published research in the fields of CSR, management & leadership, HR, sustainable finance & reporting, social enterprise, entrepreneurship, philanthropy, and sustainable business practices.
The 3 Ps in a CoBS Pod
Crowdfunding: Win-win giving. Download the CoBS Research Pod
Learning Objective: Understand how crowdfunding works and find the right approach for entrepreneurs to pitch their innovations and for donors to place their funding using a win-win approach.
Related research: Beyond the Opposition Between Altruism and Self-Interest: Reciprocal Giving in Reward-Based Crowdfunding, Journal of Business Ethics.
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