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In the modern digital age, new methods of raising capital for entrepreneurs are being explored and developed at a rapid rate. This is in part due to new legislation aimed at democratizing the funding process for startup-sized businesses, and also due to the growing mistrust in the big banks following

In the modern digital age, new methods of raising capital for entrepreneurs are being explored and developed at a rapid rate. This is in part due to new legislation aimed at democratizing the funding process for startup-sized businesses, and also due to the growing mistrust in the big banks following the recent financial crisis of 2008. Today, many entrepreneurs are turning to the Internet and crowdsourcing in order to raise the funds they need to get their business ideas off the ground. This trend is more commonly known as crowdfunding. Crowdfunding is not as narrow of an industry as some may think. It goes much deeper than just the commonly known platforms such as Kickstarter or Indiegogo. There are four different crowdfunding methods that exist today, as well as hundreds of websites known as crowdfunding platforms created in order to facilitate these methods as a third party intermediary. My thesis aims to research, break down, study, and compare the various methods of crowdfunding. In addition, I explore the modern uses of the more traditional methods of raising capital for entrepreneurs such as angel investors, venture capital, bank/Small Business Association loans, and bootstrapping. This research includes both primary and secondary research. For my primary research, I interviewed three subject matter experts on the capital markets, and conducted two case studies regarding crowdfunding campaigns. In my secondary research, I used credible published studies, blogs and articles with expert testimonials, and other trustworthy resources such as encyclopedias and professional reports. In the end, I compare and contrast the various methods of raising capital explored throughout the paper, and provide my recommendations regarding each method for entrepreneurs interested in raising funds for their next venture. We live in an exciting time, and there are a lot of interesting new developments emerging as the capital markets continue to integrate with the modern digital age. I hope this thesis will help entrepreneurs, investors, and anyone else who may have interest in the modern capital markets or fundraising develop a better understanding of new trends in raising capital today.
ContributorsCohan, Taylor (Author) / Montoya, Detra (Thesis director) / Schlacter, John (Committee member) / Barrett, The Honors College (Contributor)
Created2015-12
Description
This thesis provides an analysis on the crowdfunding environment in comparison to traditional fundraising methods in an effort to understand the relationship between the two types of fundraising and why crowdfunding has gained traction. Additionally, this thesis provides a study on good vs. bad crowdfunding to formulate a strategy for

This thesis provides an analysis on the crowdfunding environment in comparison to traditional fundraising methods in an effort to understand the relationship between the two types of fundraising and why crowdfunding has gained traction. Additionally, this thesis provides a study on good vs. bad crowdfunding to formulate a strategy for crowdfunding success. Methods of analysis include the execution of a situational analysis for both fundraising environments, and the collection of primary and secondary data of case studies of both crowdfunding failures and successes. Results showed that although crowdfunding provides lower search cost, greater efficiency, and eliminates geographical limitations leading to successful fundraising, the industry itself is too new and unexplored to be solely relied upon. Fundraising campaigns are most effective when crowdfunding is used complimentary to traditional fundraising methods. This thesis finds that crowdfunding offers unparalleled connectivity between creators and funders, but the transparency of the crowdfunding process is not ready to be trusted entirely. Until more data is collected on the crowdfunding environment, crowdfunding is best utilized in conjunction with traditional fundraising methods.
ContributorsRoth, Ari Lawrence Max (Author) / Giles, Bret (Thesis director) / Schlacter, John (Committee member) / Department of Marketing (Contributor) / Herberger Institute for Design and the Arts (Contributor) / Barrett, The Honors College (Contributor)
Created2016-05