Theories of crowdfunding and token issues: a review

Abstract

Entrepreneurial, innovative and small- and medium-sized firms experience difficulties with raising funds using traditional debt and equity. Consequently, they are constantly looking for new strategies of financing. Latest inventions are crowdfunding and token issues. In contrast to traditional ways of raising funds these innovations: 1) use modern technology (on-line transactions, blockchain etc.) much more actively; 2) are usually quicker in reaching potential investors/funders; 3) use more actively network benefits such as, for example, a large number of interactions between investors/funders and between funders and firms. These changes are so significant that some experts list them among the top business inventions of 21st century. This article provides a review of the growing number of theoretical papers in the areas of crowdfunding and token issues, compare their findings with empirical evidence and discuss directions for future research. The research shows that a large gap exists between theoretical literature and empirical literature.