Click to Invest? Unpacking Why Crowdfunding Still Struggles in Emerging Economies

Abstract

This study examines the challenges investors in emerging economies face when engaging in crowdfunding. Despite its potential as an alternative source of startup financing, a number of obstacles limit its growth. Data were gathered from 22 participants, including investors and industry experts, using a semi-structured interview method based on a qualitative phenomenological approach. This study determines key issues such as legal hurdles, lack of financial and digital literacy, trust deficit, and lack of the Internet. Drawing from agency theory, this study sheds light on how trust, control, and transparency impact investors’ decisions, and provides an empirical basis for future research on crowdfunding and startup funding.  These findings have practical value for policymakers, crowdfunding websites, institutions of higher education, and incubators. This study contributes both theoretically and practically by identifying ways to improve the design and implementation of crowdfunding to better support startups, entrepreneurs, and economic growth in developing countries.  It also opens new areas for future research, including cross-country analysis and the role of crowdfunding in empowering women economically.