A Preliminary Examination into the Motivating Factors of Crowdfunding Backers

Crowdfunding is a phenomenon in which entrepreneurs are able to garner financial backing for ideas from a nontraditional source. Entrepreneurs are no longer confined to seeking financing from large banks and (or) angel investors (i.e., venture capitalists). Rather, individuals with innovative ideas can now seek financial resources directly from the public through the practice of crowdfunding. Scholarly research in this emerging area has not kept pace with its growth in practice. Since crowdfunding cannot exist without the willingness of individuals to invest in projects, it is important to clearly understand the motivating factors of the investors. This research analyzes an important group of crowdfunding stakeholders—the backers or investors of the project. Understanding what motivates these individuals to support an entrepreneur is the guiding question of our research. The purpose of this chapter then is to provide insight into the phenomenon of crowdfunding by examining the factors that lead individuals to support projects developed by entrepreneurs.