Crowdfunding sustainability : how do entrepreneurs of sustainability projects utilise the potential of crowdfunding for fundraising?

Abstract

Entrepreneurs of sustainability projects face difficulties in raising capital from conventional financial sources, primarily because of a weaker focus on financial performance. However, the emergence of crowdfunding as an alternative way of raising capital has opened doors for entrepreneurs of sustainability projects. In contrast to conventional for-profit investors, funders tend to be motivated by the projects’ ideas rather than financial returns. Thus, crowdfunding is assumed to be suitable for sustainability projects because of their focus on social and environmental objectives. Despite the rapid growth of crowdfunding, research on the phenomenon remains limited. This study aims to explore how entrepreneurs of sustainability projects can utilise the potential of crowdfunding for fundraising. We have conducted semi-structured interviews with five entrepreneurs and a crowdfunding expert in the Netherlands to examine their experiences in crowdfunding. The results show that geographical proximity and social networks are important for fundraising, particularly in the beginning of the campaign period. Furthermore, crowdfunding platforms can affect fundraising success, especially by acting as trustworthy intermediates. Entrepreneurs of noninvestment-based crowdfunding campaigns also tend to be more committed to their projects’ social and environmental objectives, while this is not prevalent to the same extent in investment-based crowdfunding campaigns. Finally, our findings indicate that signalling commitment to sustainability objectives in crowdfunding campaigns can positively influence the projects’ appeal to funders.