Financing in the Startup Scene: Crowdfunding as a Medium for Entrepreneurs to Finance their Projects

Details

Supervisors

Lejeune, Christophe

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion

Abstract

This master’s thesis’ main objective was to find out whether crowdfunding could be seen as a viable and legitimate solution for entrepreneurs to fund their projects, as well as whether it had the potential to suppress venture capital firms and business angels domination as the main source of financing. For this research to take place, both a literature and practical review took place. In Part I, a first description of the FinTech industry was made, followed by a detailed account of the traditional financing methods, as well as the rise of alternative ones, which in this particular case was crowdfunding. In this section, all business models were described, as well as the advantages and risks that these platforms may have on entrepreneurs and investors. In Part II, a qualitative research was developed, more precisely through interviews with people who are relevant in this field and who have extensive knowledge on the industry. A set of open-ended questions were asked in order to stimulate the conversation and obtain results that otherwise one would not. At the end of said interviews, it was noticeable that one major conclusion could be drawn from it – despite its early age, crowdfunding has become a financial tool that entrepreneurs should use to complement other funding methods. Perhaps it is not yet the first choice for most, but if all other options have been exhausted, this one is a legitimate one. However, it is very unlikely these platforms will be able to raise millions as opposed to venture capital firms. Indeed, a way has been pathed for business angels to work together with crowdfunding platforms, but these are still years away from surpassing the amount of money VCs raise. Finally, for further research and development on this matter, it would be interesting for a quantitative research to be undertaken to see how these platform could measure up against VCs in the long run.