Equity Crowdfunding: 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, contributing to the stability and economic development of nations. This is why the governments of many nations, including Ghana, put up initiatives to promote entrepreneurial activities. This paper focuses on assessing 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. A sample size of 149 entrepreneurs in various industries, 118 investors, and 90 respondents acting as both entrepreneurs and investors were chosen through purposive sampling method. Data were collected through the use of questionnaires and analyzed using descriptive statistics, employing 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, it became evident that the investors and entrepreneurs had inadequate knowledge and understanding about crowdfunding adoption in Ghana. The study showed that equity crowdfunding is capable of bridging the funding gap and, therefore, is a suitable alternative in generating funds for entrepreneurship in Ghana. It is recommended that equity crowdfunding should 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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27. Kuma, F. K., Yusoff, M. E. B., & Apreku-Djan, P. K. (2022). A Synthesis of Crowdfunding Concepts in the Ghanaian Context: Crowdfunding Information Challenges in Ghana. Journal of the Knowledge Economy, 1-26.
28. 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.
29. 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 (2013). The Crowdfunding Industry Report: Market Trends Composition and Crowdfunding Platforms.
32. Massolution, C.L. (2015). Crowd funding industry report, available at: http://reports.crowdsourcing.org/index.php? route product/product&product_id_54
33. Mazzocchini, F. J. & Lucarelli, C. (2023). Success or failure in equity crowdfunding? A systematic literature review and research perspectives. Management Research Review, 46(6), 790-831.
34. 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.
35. 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
36. 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
37. Nugroho, B. Y. (2020). Challenges Equity Crowdfunding Company Business Model. SSRG International Journal of Economics and Management Studies (IJEMS), 7(12), 147-151.
38. Owusua, J. & 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).
39. Ralcheva, A. & Roosenboom, P. (2020). Forecasting success in equity crowdfunding. Small Business Economics, 55(1), 39-56.
40. Robson, P.J. & Obeng, B.A. (2008). The barriers to growth in Ghana. Small Business Economics, 30(4), 385-403.
41. Schwienbacher, A. (2010). Crowdfunding of small entrepreneurial venture. The Oxford Handbook of Entrepreneurial Finance
42. Schwienbacher, A. & Larralde, B. (2010). Crowdfunding of small entrepreneurial ventures. Handbook of entrepreneurial finance, Oxford University Press, Forthcoming.
43. 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.
44. Shneor, R., Zhao, L., & Flåten, B.T. (2020). Advances in Crowdfunding, Research and Practice, ISBN 978-3-030-46309-0, Palgrave Macmillan
45. Wierzbicka, K. (2018). Crowdfunding as an Alternative Method of Raising Capital, Financial Internet Quarterly “e-Finanse” 2018, vol. 14/ no. 4, s. 56-66
46. Wilson, K. & Testoni, M. (2014). Improving the role of equity crowdfunding in Europe’s capital markets. Bruegel Policy Contribution, 1–14.
47. Wilson, K. T. (2014). Improving the role of equity crowdfunding in Europe's capital markets.
48. Yasar, B. (2021). The new investment landscape: Equity crowdfunding, Central Bank Review 21 (2021) 1-16.
49. Yunus (2007). A billion bootstraps: microcredit, barefoot banking and business solution for ending poverty.
50. 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 Ghana (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., & Schwienbacher, A. (2013). Crowdfunding: Tapping the right crowd. Journal of Business Venturing, 29(5), 585.
6. Berndt, A. & 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., & 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 Innovations finanzierung. 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. Kuma, F. K., Yusoff, M. E. B., & Apreku-Djan, P. K. (2022). A Synthesis of Crowdfunding Concepts in the Ghanaian Context: Crowdfunding Information Challenges in Ghana. Journal of the Knowledge Economy, 1-26.
28. 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.
29. 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
30. 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
31. Massolution (2013). The Crowdfunding Industry Report: Market Trends Composition and Crowdfunding Platforms.
32. Massolution, C.L. (2015). Crowd funding industry report, available at: http://reports.crowdsourcing.org/index.php? route product/product&product_id_54
33. Mazzocchini, F. J. & Lucarelli, C. (2023). Success or failure in equity crowdfunding? A systematic literature review and research perspectives. Management Research Review, 46(6), 790-831.
34. 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.
35. 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
36. 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
37. Nugroho, B. Y. (2020). Challenges Equity Crowdfunding Company Business Model. SSRG International Journal of Economics and Management Studies (IJEMS), 7(12), 147-151.
38. Owusua, J. & 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).
39. Ralcheva, A. & Roosenboom, P. (2020). Forecasting success in equity crowdfunding. Small Business Economics, 55(1), 39-56.
40. Robson, P.J. & Obeng, B.A. (2008). The barriers to growth in Ghana. Small Business Economics, 30(4), 385-403.
41. Schwienbacher, A. (2010). Crowdfunding of small entrepreneurial venture. The Oxford Handbook of Entrepreneurial Finance
42. Schwienbacher, A. & Larralde, B. (2010). Crowdfunding of small entrepreneurial ventures. Handbook of entrepreneurial finance, Oxford University Press, Forthcoming.
43. 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.
44. Shneor, R., Zhao, L., & Flåten, B.T. (2020). Advances in Crowdfunding, Research and Practice, ISBN 978-3-030-46309-0, Palgrave Macmillan
45. Wierzbicka, K. (2018). Crowdfunding as an Alternative Method of Raising Capital, Financial Internet Quarterly “e-Finanse” 2018, vol. 14/ no. 4, s. 56-66
46. Wilson, K. & Testoni, M. (2014). Improving the role of equity crowdfunding in Europe’s capital markets. Bruegel Policy Contribution, 1–14.
47. Wilson, K. T. (2014). Improving the role of equity crowdfunding in Europe's capital markets.
48. Yasar, B. (2021). The new investment landscape: Equity crowdfunding, Central Bank Review 21 (2021) 1-16.
49. Yunus (2007). A billion bootstraps: microcredit, barefoot banking and business solution for ending poverty.
50. 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
2024-03-31
How to Cite
Yensu, J., Asumadu, G., Atuilik, D. A., & Asare, K. B. (2024). Equity Crowdfunding: An Alternative Source of Financing Entrepreneurship in the Greater Accra Region of Ghana. European Scientific Journal, ESJ, 20(7), 54. https://doi.org/10.19044/esj.2024.v20n7p54
Section
ESJ Social Sciences
Copyright (c) 2024 Joseph Yensu, George Asumadu, Daniel Abayaakadina Atuilik, Kyei Baffour Asare
This work is licensed under a Creative Commons Attribution 4.0 International License.
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