Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297413 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2023-28
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper examines the role of rewards-based and equity-based crowdfunding in funding new businesses. In this model, crowdfunding is a unique technology that serves as a real option for production and eliminates downside risk. It affords entrepreneurs who face uncertain consumer demand a viable means of funding new projects. Crowdfunding performs well for projects with a high variability in demand and a low probability of success. Conversely, crowdfunding does not perform well for large projects with little variability in demand or for projects where the production side is uncertain.
Subjects: 
Digital currencies and fintech
Financial markets
Financial services
JEL: 
G21
G24
G32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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