Crowdfunding in a Context of Financing Firms Through Their Life Cycle

Tin Horvatinović Silvije Orsag
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Tin Horvatinović Silvije Orsag: University of Zagreb, Faculty of Economics and Business, Zagreb, Croatia University of Zagreb, Faculty of Economics and Business, Zagreb, Croatia

Zagreb International Review of Economics and Business, 2018, vol. 21, issue 1, 105-118

Abstract: In this paper we first present some developed theories of financing that firms might accord with in their development stages. The framework, assumptions and predictions of the capital structure of firms in each theory is shown. Afterwards, crowdfunding, as a fairly new source of financing that is increasing significance, is described and is differentiated on the basis of the type of return on investment for the outside investors. In recent literature there have been models that introduce crowdfunding in the framework of financing firms through their life cycle stages. We point the difficulty of encompassing crowdfunding in the mentioned models because of characteristics that are unique to it from the perspective of the investor and the firm. While it is not surprising that crowdfunding is used in development stages, these characteristics make it difficult to construct a model of financing firms that has traditional means of financing and crowdfunding. JEL Classification: G32, L26

Keywords: crowdfunding; small business financing; life cycle of firms (search for similar items in EconPapers)
Date: 2018
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DOI: 10.2478/zireb-2018-0006

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