The Impact Of Crowdfunding As A Tool Of Financial Technology On The Financial Performance Of Startups And Entrepreneurial Companies

Author

Abeer Abdelmoneim El-Gamal

Mona Kadry

Farid Moharam Algarhy

Abstract

The study explores the impact of crowdfunding، as one of the financial technology tools، on the financial performance of small and medium-sized enterprises (SMEs). It highlighted the significance of crowdfunding platforms as essential mechanisms for financing that emerged in the aftermath of the global financial crisis، which led to a liquidity shortage. With the advent of financial technology and its tools، the importance of modern financing techniques became evident، providing opportunities for SMEs to access non-traditional funding sources. Crowdfunding platforms hold particular importance in certain countries to bridge the financing gap for SMEs، achieve sustainable development goals، enhance financial inclusion، and foster innovation among entrepreneurs. Despite these benefits، crowdfunding faces several challenges، including cybersecurity risks، the potential failure or collapse of crowdfunding platforms، fraud-related risks، money laundering، and terrorism financing. Additionally، there are anticipated changes in regulatory frameworks، tax treatment، and political and commercial risks associated with equity investments. Business model risks also exist، such as campaign owners failing to raise the required amount or failing to deliver promised rewards to supporters. Given the importance of crowdfunding in enhancing SMEs’ access to financing، it positively contributes to financial inclusion and sustainable development. This underscores the need for regulatory authorities، legislative frameworks، and oversight in Arab countries to support crowdfunding and address its associated risks. The study employed a descriptive-analytical methodology to test its hypotheses، with a sample of 348 respondents consisting of SME owners. The results revealed a statistically significant impact of crowdfunding on financial performance and statistically significant differences based on demographic variables (educational qualification، years of experience، field of work، company type، or ownership size).

Keywords: Crowdfunding – Financial Performance – Examining the Relationship Between Crowdfunding and Financial Performance.

Download Full Article