Crowdfunding refers to the efforts of an individual or group of entrepreneurs to use the Internet to raise capital for their projects by soliciting relatively small contributions from a large number of funders. Venture capital firms provide private equity funding to newly established, early-stage, and developing businesses that are thought to have a significant growth potential.

Startups and entrepreneurs with innovative ideas have historically been able to obtain finance from banks, business angels, venture capitalists, and other financial sources (Chemmanur and Fulghieri 2014). Crowdfunding has emerged as a significant alternative to traditional forms of fundraising in a number of industries, enabling entrepreneurs who were previously excluded from the entrepreneurial finance system to get financial resources (Estrin et al. 2018).