Want to Teach or Research Crowdfunding?
Consider These Key Concepts
By Andrew Zacharakis, Babson College
and Will Drover, Visiting Scholar at Babson College
Crowdfunding, a term we often see nowadays in the business headlines, is the use of the Internet to raise capital by way of small investments from a large number of investors. Since the inception of the crowdfunding model, billions have flowed into new ventures—representing what many have noted to be a “global phenomenon,” a “boom,” and a “revolution.”
Though it remains difficult to accurately predict the long-term implications of crowdfunding, it is likely to become a permanent fixture in the entrepreneurial landscape. Take for example that one research firm noted that crowdfunding platforms raised nearly $3 billion in 2012 (an 81 percent increase), while projecting an increase in 2013, to $5.1 billion.1 Similarly, figures from the Fung Institute at UC Berkley estimate the size of the crowdfunding market to be just under $4 billion.
It is not often that a new financing mechanism is introduced to the entrepreneurial ecosystem. It follows that such an introduction will produce a myriad of changes, and all of these changes represent opportunities for entrepreneurship educators—both in the classroom and in scholarship. Because the explanation of theory is often critical to advancing our students’ understanding, we discuss a set of theories that might assist in framing classroom discussion and engendering future research on equity crowdfunding.
To read the full article and gain access to Babson Executive Education’s premium content, subscribe to Babson Insight by completing the form on the right. »
About the Authors
Andrew Zacharakis is the John H. Muller Jr. Professor in Entrepreneurial Studies at Babson College. He also is the director of the Babson College Entrepreneurship Research Conference and past president of the Entrepreneurship Division of the Academy of Management. He is a past chair of the Entrepreneurship Department at Babson and a past director of The Arthur M. Blank Center for Entrepreneurship at Babson.
Will Drover is a visiting scholar at Babson College. His research has been published in journals such as Entrepreneurship Theory and Practice (forthcoming), the Journal of Business Venturing (forthcoming) and the Journal of Business Ethics (2012), and he has presented his work at various leading conferences throughout the U.S., and internationally—including the Academy of Management, the Babson College Entrepreneurship Research Conference and the CU-Kauffman Crowdfunding Conference.