Success Factors in Reward based and Equity based Crowdfunding in Finland

Master’s Thesis 
12 
crowdfunding is viewed slightly differently amongst leading scholars in the field of 
crowdfunding research. This slight discrepancy between definitions shows how the 
term and the topic of crowdfunding is evolving and under constant reiteration. 
Source 
Definition of Crowdfunding 
Mollick (2014)
 
Crowdfunding refers to the efforts by entrepreneurial 
individuals and groups – cultural, social, and for-profit – 
to fund their ventures by drawing on relatively small 
contributions from a relatively large number of individu-
als using the Internet, without standard financial inter-
mediaries. 
Belleflamme et al. (2014)
 
Crowdfunding involves an open call, mostly through the 
internet, for the provision of financial resources either in 
the form of donation or in exchange for the future prod-
uct or some form of reward to support initiatives for spe-
cific purposes. 
Gerber and Hui (2013) 
Crowdfunding uses web technologies and existing online 
payment systems to facilitate transactions between crea-
tors and funders. --- Ideas span across fields and vary in 
scope. --- Crowdfunding is derived from a broader con-
cept of crowdsourcing. 
Lehner (2013) 
Crowdfunding means tapping a large dispersed audi-
ence, dubbed as “the crowd” for small sums of money to 
fund a project or a venture - typically through social me-
dia or the internet 
Table 1: A table of crowdfunding definitions in recent academic literature 
Crowdfunding allows entrepreneurs to attract funding from the public rather than spe-
cialized companies or individuals. It also makes for more flexible funding, because 

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Master’s Thesis 
13 
the total amount raised is usually constructed from a large number of small invest-
ments from different people. For small businesses with limited financing options, 
crowdfunding provides a viable alternative
(Valanciene and Jegeleviciute, 2013)
.
Raising capital through crowdfunding is based on a close co-operation between entre-
preneurs, investors and intermediaries 
(Valanciene and Jegeleviciute, 2013)
. Entre-
preneurs seek funding through an intermediary, usually a crowdfunding platform, and 
investors contribute to the ventures that seem most interesting to them. Crowdfunding 
investors typically focus on the ideas and core values of the business, rather than val-
uations
6
. Crowdfunding also protects entrepreneurs and investors from underfunded 
ventures, since most platforms do not execute transactions if the minimum target is 
not met (Frydrych et al., 2014).