Equity Crowdfunding as an Alternative Source of Financing Entrepreneurship in the Greater Accra Region of Ghana
Keywords:
Equity, Equity-Crowdfunding, Crowdfunding, Financing, Entrepreneurship, Ghana
Abstract
Entrepreneurship is globally seen as a tool for job creation and contributing to the stability of the economies of nations. This is why the governments of many nations including Ghana put up initiatives to promote entrepreneurial activities. This work sought to assess equity crowdfunding as an alternative source of generating fund for entrepreneurial projects in Ghana. A combination of qualitative and quantitative approaches were used in conducting this study in the Tema Municipality of the Greater Accra Region due to the intense commercial activity in that area. Out of a population of 10,000 entrepreneurs and investors, a sample size of 149 entrepreneurs in various industries and 118 investors as well as 90 respondents acting as both entrepreneurs and investors were chosen through purposive sampling method. Data was collected through the use of questionnaires and was analysed by way of descriptive stattistics using tables and graphs. The results of the study showed that most entrepreneurs and investors had heard of equity crowdfunding but very few understood the operations of this type of funding. Also, most respondents saw one of the challenges in the adoption of crowdfunding in Ghana to be inadequate
understanding of it among entrepreneurs and investors. It is evident from the study that the level of awareness of equity crowdfunding in the entrepreneurship community in Ghana is low. The study showed that equity crowdfunding is capable of bridging the funding gap and therefore a suitable alternative in generating funds for entrepreneurship in Ghana. It is recommended that equity crowdfunding be included as a source of funding in entrepreneurship curriculum. Also, policies should be made by government to establish regulations that will protect all the parties involved in equity crowdfunding.
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References
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28. Manigart, S., & Sapienza, H. (2017). Venture capital and growth. In D. Sexton & H. Landström (Eds.), The blackwell handbook of entrepreneurship (pp. 240–258). Blackwell Publisher
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31. Massolution, C. L. (2015). Crowd funding industry report, available at: http://reports.crowdsourcing.org/index.php? route product/product&product_id_54
32. Mensah, S. (2004, March). A review of SME financing schemes in Ghana. In A Presentation at the UNIDO Regional Workshop of Financing SMEs (pp. 15-16). Ghana: Accra.
33. Mollick, E. R. 2013. „The Dynamics of Crowdfunding: An Exploratory Study”. Journal of Business Venturing 29 (1), 1e16. https://doi.org/10.1016/j.jbusvent.2013.06.005
34. Moritz, A., & Block, J. H. (2014). Crowdfunding und Crowdinvesting: State of the Art der wissenschaftlichen Literatur [Crowdfunding and Crowdinvesting: A Review of the Literature]. ZfKE Zeitschrift fur KMU und Entrepreneurship, 62 €, 57 89. doi:10.2139/ssrn.2274141
35. Nugroho, B. Y. (2020). Challenges Equity Crowdfunding Company Business Model. SSRG International Journal of Economics and Management Studies (IJEMS), 7(12), 147-151.
36. Owusua J. and Owusu-Ansah W. A. (2020) Understanding Crowdfunding Ecosystem as Alternative Source of Entrepreneurial Finance for SMEs in Ghana, International Journal of Innovation, Creativity and Change, 13(11)
37. Ralcheva, A., & Roosenboom, P. (2020). Forecasting success in equity crowdfunding. Small Business Economics, 55(1), 39-56.
38. Robson, P. J., & Obeng, B. A. (2008). The barriers to growth in Ghana. Small Business Economics, 30(4), 385-403.
39. Schwienbacher, A. (2010). Crowdfunding of small entrepreneurial venture. The Oxford Handbook of Entrepreneurial Finance
40. Schwienbacher, A., & Larralde, B. (2010). Crowdfunding of small entrepreneurial ventures. Handbook of entrepreneurial finance, Oxford University Press, Forthcoming.
41. Schwienbacher, A., & Larralde, B. (2012). Crowdfunding of Small Entrepreneurial Ventures. In D. Cumming (Ed.), The Oxford Handbook of Entrepreneurial Finance. New York, NY: Oxford University Press.
42. Shneor R., Zhao L. and Flåten B. T. (2020) Advances in Crowdfunding, Research and Practice, ISBN 978-3-030-46309-0, Palgrave Macmillan
43. Wierzbicka K. (2018) Crowdfunding as an Alternative Method of Raising Capital, Financial Internet Quarterly “e-Finanse” 2018, vol. 14/ no. 4, s. 56-66
44. Wilson, K., & Testoni, M. (2014). Improving the role of equity crowdfunding in Europe’s capital markets. Bruegel Policy Contribution, 1–14.
45. Wilson, K. T. (2014). Improving the role of equity crowdfunding in Europe's capital markets.
46. Yasar B. (2021) The new investment landscape: Equity crowdfunding, Central Bank Review 21 (2021) 1-16
47. Yunus. (2007). A billion bootstraps: microcredit, barefoot banking and business solution for ending poverty.
48. Ziegler, T., Shneor, R., Wenzlaff, K., Wang, B., Kim, J., Paes, F. F. D. C., ... & Adams, N. (2021). The global alternative finance market benchmarking report. Available at SSRN 3771509.
2. Alagidede, P., Baah-Boateng, W., & Nketiah-Amponsah, E. (2013). The Ghanaian economy: an overview. Ghanaian Journal of Economics, 1(1), 4-34.
3. Ari, I., Aladdasi, M., & Koc, M. (2021). Equity crowdfunding and venture capital as complementary financing models for sustainable entrepreneurs: A comprehensive review. Available at SSRN 4023847.
4. Bank of Bank, 2021. Bank of Ghana issues policy on crowdfunding. NOTICE NO. BG/GOV/SEC/2021/01 Retrieved from NOTICE-CROWDFUNDING-POLICY.pdf (bog.gov.gh) (on 1/12/2023)
5. Belleflamme, P., Lambert, T., and Schwienbacher, A. (2013). Crowdfunding: Tapping the right crowd. Journal of Business Venturing, 29(5), 585.
6. Berndt A. and Mbassana M. (2016), Crowdfunding: The Beliefs of Rwandan Entrepreneurs, East Africa Research Papers in Business, Entrepreneurship and Management, EARP-BEM No. 2016:05
7. Blaseg D., Cumming D., and Koetter M. (2021) Equity Crowdfunding: High-Quality or Low Quality Entrepreneurs?, Entrepreneurship Theory and Practice 2021, Vol. 45(3) 505–530
8. Brown, R., Mawson, S., Rowe, A., & Mason, C. (2018). Working the crowd: Improvisational entrepreneurship and equity crowdfunding in nascent entrepreneurial ventures. International Small Business Journal, 36(2), 169-193.
9. Creswell, J. W., Klassen, A. C., Plano Clark, V. L., & Smith, K. C. (2011). Best practices for mixed methods research in the health sciences. Bethesda (Maryland): National Institutes of Health, 2013, 541-545.
10. CIA World Fact book (2020) from www.cia.gov/the-world-factbook/countries/ghana/
11. De Prijcker, S., Manigart, S., Collewaert, V., & Vanacker, T. (2019). Relocation to get venture capital: a resource dependence perspective. Entrepreneurship Theory and Practice, 43(4), 697-724.
12. Djimesah, I. E., Zhao, H., Okine, A. N. D., Li, Y., Duah, E., & Mireku, K. K. (2022). Analyzing the technology of acceptance model of Ghanaian crowdfunding stakeholders. Technological Forecasting and Social Change, 175, 121323.
13. Dorfleitner, G., Hornuf, L., & Weber, M. (2018). Dynamics of investor communication in equity crowdfunding. Electronic Markets, 28(4), 523-540.
14. Eckhardt, M. (2016). Equity Crowdfunding in Finland: An alternative investment option.
15. Esmaeilpourmotlagh, H. (2018). Why startup entrepreneurs acquire capital through equity crowdfunding?.
16. European Business Angel Network. (2018). European early stage market statistics 2017. http://www.eban. org/wp-content/uploads/2018/07/EBAN-Statistics-Compendium-2017.pdf
17. Ferreira, B. C. F., & Felipe, I. J. D. S. (2020). Determinants of the success of equity crowdfunding campaigns.
18. Fukuhara, M., 2020. An overview of online alternative finance. Public Policy Review 16 (4), 1e19
19. Gierczak, M. M.; Bretschneider, U.; Haas, P.; Blohm, I. & Leimeister, J. M.(2015): Crowdfunding – Outlining the New Era of Fundraising. In: Gajda, O. & Brüntje, D. (Eds.), Crowdfunding in Europe – State of The Art in Theory And Practice; FGF Studies in Small Business and Entrepreneurship (pp. 7-23). Cham: Springer Science + Business Media.
20. Golic Z. (2014) Advantages of Crowdfunding as an Alternative Source of Financing of Small and Medium-Sized Enterprises, Proceedings of the Faculty of Economics in East Sarajevo Year 2014, Issue 8, pр. 39-48
21. Hemer, J. (2011). A snapshot on crowdfunding (Working Papers Firms and Region, No. R2/2011). Karlsruhe: Fraunhofer Institute for Systems and Innovation Research ISI.
22. Hemer, J., Schneider, U., Dornbusch, F., & Frey, S. (2011). Crowdfunding und andere Formen informeller Mikrofinanzierung in der Projekt und Innovationsfinanzierung. Stuttgart: Fraunhofer Verlag
23. Herawati, L. L., & Wibowo, B. (2022, August). Factors Influencing Participation in Equity Crowdfunding Indonesia. In Proceedings of International Conference on Economics Business and Government Challenges (Vol. 1, No. 1, pp. 45-55).
24. Howe, J. (2006). The rise of crowdsourcing. from http://archive.wired. com/wired/archive/14.06/crowds.html
25. Kirby, E., & Worner, S. (2014). Crowd-funding: An infant industry growing fast. IOSCO Research Department, 1-63.
26. Kraemer-Eis, H., Botsari, A., Gvetadze, S., Lang, F., Torfs, W. (2020). European Small Business Finance Outlook 2020: the Impact of COVID-19 on SME Financing Markets EIF Working Paper
27. Lukkarinen, A., Teich, J.E., Wallenius, H., Wallenius, J. (2016). Success drivers of online equity crowdfunding campaigns. Decis. Support Syst. 87, 26e38. https:// doi.org/10.1016/j.dss.2016.04.006.
28. Manigart, S., & Sapienza, H. (2017). Venture capital and growth. In D. Sexton & H. Landström (Eds.), The blackwell handbook of entrepreneurship (pp. 240–258). Blackwell Publisher
29. Mason, C. (2020). The coronavirus economic crisis: its impact on venture capital and high growth enterprises. European Commission Research Centre (Issue April). https://doi.org/10.2760/408017
30. Massolution. (2013). The Crowdfunding Industry Report: Market Trends Composition and Crowdfunding Platforms.
31. Massolution, C. L. (2015). Crowd funding industry report, available at: http://reports.crowdsourcing.org/index.php? route product/product&product_id_54
32. Mensah, S. (2004, March). A review of SME financing schemes in Ghana. In A Presentation at the UNIDO Regional Workshop of Financing SMEs (pp. 15-16). Ghana: Accra.
33. Mollick, E. R. 2013. „The Dynamics of Crowdfunding: An Exploratory Study”. Journal of Business Venturing 29 (1), 1e16. https://doi.org/10.1016/j.jbusvent.2013.06.005
34. Moritz, A., & Block, J. H. (2014). Crowdfunding und Crowdinvesting: State of the Art der wissenschaftlichen Literatur [Crowdfunding and Crowdinvesting: A Review of the Literature]. ZfKE Zeitschrift fur KMU und Entrepreneurship, 62 €, 57 89. doi:10.2139/ssrn.2274141
35. Nugroho, B. Y. (2020). Challenges Equity Crowdfunding Company Business Model. SSRG International Journal of Economics and Management Studies (IJEMS), 7(12), 147-151.
36. Owusua J. and Owusu-Ansah W. A. (2020) Understanding Crowdfunding Ecosystem as Alternative Source of Entrepreneurial Finance for SMEs in Ghana, International Journal of Innovation, Creativity and Change, 13(11)
37. Ralcheva, A., & Roosenboom, P. (2020). Forecasting success in equity crowdfunding. Small Business Economics, 55(1), 39-56.
38. Robson, P. J., & Obeng, B. A. (2008). The barriers to growth in Ghana. Small Business Economics, 30(4), 385-403.
39. Schwienbacher, A. (2010). Crowdfunding of small entrepreneurial venture. The Oxford Handbook of Entrepreneurial Finance
40. Schwienbacher, A., & Larralde, B. (2010). Crowdfunding of small entrepreneurial ventures. Handbook of entrepreneurial finance, Oxford University Press, Forthcoming.
41. Schwienbacher, A., & Larralde, B. (2012). Crowdfunding of Small Entrepreneurial Ventures. In D. Cumming (Ed.), The Oxford Handbook of Entrepreneurial Finance. New York, NY: Oxford University Press.
42. Shneor R., Zhao L. and Flåten B. T. (2020) Advances in Crowdfunding, Research and Practice, ISBN 978-3-030-46309-0, Palgrave Macmillan
43. Wierzbicka K. (2018) Crowdfunding as an Alternative Method of Raising Capital, Financial Internet Quarterly “e-Finanse” 2018, vol. 14/ no. 4, s. 56-66
44. Wilson, K., & Testoni, M. (2014). Improving the role of equity crowdfunding in Europe’s capital markets. Bruegel Policy Contribution, 1–14.
45. Wilson, K. T. (2014). Improving the role of equity crowdfunding in Europe's capital markets.
46. Yasar B. (2021) The new investment landscape: Equity crowdfunding, Central Bank Review 21 (2021) 1-16
47. Yunus. (2007). A billion bootstraps: microcredit, barefoot banking and business solution for ending poverty.
48. Ziegler, T., Shneor, R., Wenzlaff, K., Wang, B., Kim, J., Paes, F. F. D. C., ... & Adams, N. (2021). The global alternative finance market benchmarking report. Available at SSRN 3771509.
Published
2023-12-12
How to Cite
Yensu, J., Asare, K. B., Atuilik, D. A., & Asumadu, G. (2023). Equity Crowdfunding as an Alternative Source of Financing Entrepreneurship in the Greater Accra Region of Ghana. European Scientific Journal, ESJ, 24, 414. Retrieved from https://eujournal.org/index.php/esj/article/view/17558
Section
ESI Preprints
Copyright (c) 2023 Joseph Yensu, Kyei Baffour Asare, Daniel Abayaakadina Atuilik, George Asumadu
This work is licensed under a Creative Commons Attribution 4.0 International License.
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