Can equity-based crowdfunding be a fast and effective financing model for early-stage startups?

Abstract

Nowadays, with the developments in the field of information, communication, and technology, we see that the way of doing business has changed in many sectors, and startups are the ones leading this change. For this reason, the importance of startups for national economies is increasing daily. One of the most fundamental conditions for increasing the number of successful startups in countries is access to the financing that startups need. Especially for early-stage startups with limited access to traditional financing instruments, providing financing from alternative sources becomes very important. For this reason, alternative financing models such as crowdfunding have become more important for startups today. This study investigated the importance of crowdfunding, its types, and, in particular, whether equity-based crowdfunding can be used effectively in financing early-stage startups. In the study, the general survey model and document analysis technique were used to examine the campaigns and campaign details of platforms with equity-based crowdfunding licenses. The findings obtained were classified according to their purpose. As a result of the research, it was concluded that equity-based crowdfunding can be used to finance seed and early-stage startups, and that the average amount of funding that startups need in the early stage can be obtained with very short campaign periods.