The Interaction between Startups and the Crowd: A Praxeological Perspective on Crowdfunding

Abstract

Due to the global financial crisis it is more difficult to obtain capital from traditional financing sources, such as banks and venture capital funds. Therefore, startup entrepreneurs need to be creative when they are seeking funding. The purpose of this paper is to study the recently emerged phenomenon called crowdfunding, which is an alternative financing method for various business ventures.

This study employs the approach of a theoretical thesis by performing an extensive review of the current literature on crowdfunding. The aim of the thesis is to further the understanding of the crowdfunding phenomenon by adopting a sociological perspective of Bourdieu’s praxeology.

The thesis addresses the following research question: how does the relationship between startup firms and the crowd initiate? The key finding is that there are various factors that affect the motivation and behaviour of people for engaging in crowdfunding. Consequently, there are provided theoretical explanations on the crowdfunding process, suggestions for future research, and practical implications for improving crowdfunding campaigns to make them more successful.