International Journal of Financial Technology Perspective

International Journal of Financial Technology Perspective

Crowdfunding: An Alternative Approach to Conventional Financing: The Lived Experience of the Iranian Capital Market

Document Type : Original Article

Authors
atiyeh valizadeh larijani 1
Fraydoon Rahnamay Roodposhti 2
Ali Rahmani 3
Mirfeiz Fallah Shams 4
1 PhD student, Department of Financial Management, Accounting and Financial Engineering, Science and Research Branch, Islamic Azad University, Tehran, Iran.
2 Professor, Department of Financial Management, Accounting and Financial Engineering, Science and Research Branch, Islamic Azad University, Tehran, Iran.
3 Professor, Department of Accounting, Faculty of Social and Economic Sciences, Al-Zahra University (S), Tehran, Iran
4 Associate Professor, Department of Financial Management, Central Tehran Branch, Islamic Azad University, Tehran, Iran.
Abstract
The development of businesses and entrepreneurship is today recognized to contribute to economic growth and capital market expansion in Iran. Entrepreneurship development requires purchasing machinery and equipment to provide working capital and complete development-oriented projects, enhancing the profitability and liquidity of corporations. Financing in organizations to implement profitable activities is of great concern to CEOs, business owners, and entrepreneurs, with multiple economic factors imposing challenges regarding enterprise financing. The most effective approach to financing businesses can be identified by analyzing their financial statuses, and enterprises can be financed through several methods, such as bank loans and issuing debt and equity securities in the capital market. Traditional financing is a frequent approach in financing economic institutions performed by issuing securities. Despite its advantages for business owners, traditional financing has multiple challenges. In light of online developments, social media platforms have opened new doors to financing, with alternative financing methods emerging to replace traditional processes. A public campaign is released on online platforms to collect individual capital, and such campaigns have been of interest to many investors and business owners since they offer several advantages, driving entrepreneurship and capital market growth. This study sought to elaborate on the advantages and disadvantages of crowdfunding as an innovative financing approach and identify the factors that have shifted financing from traditional instruments to crowdfunding.
  • Taghavifard, M. T., Feizi, K., Zadjabbari Ochtapeh, B., Bamdadsofi, J., Dehghan-Dehnavi, M. (2022). A model for controlling risk of crowdfunding service (Case study: Mellat Bank). Journal of Management Research in Iran, 26(1), 1-29.
  • Jafari, S. M., Poorzanjani P. (2022). Factors affecting the interest of individuals to participate and invest in social crowdfunding projects. Journal of Asset Management and Financing, 10(3), 95-118.
  • Haji Gholam Saryazdi, Ali, Rajabzadeh Ghatari, Ali, Mashayekhi, Alinaghi, Hassanzadeh, Alireza, (2019), Designing a Qualitative System Dynamics Model of Crowdfunding by Document Model Building, Qualitative Research in Financial Markets, Vol. ahead-of-print No. ahead-of-print. 
  • Zarandi, S., Afsharpoor, S., Asakareh, S. (2016). Enghelab-e Tamin Mali-ye Jamei Bastari baraye Tamin Mali-ye Kasb o Kar haye Nopa [in Persian]. Tehran: Bourse Publishers.
  • Sadabadi, Aliasghar, Jafarian, Fatemeh, & Rahimi Rad, Zohreh. (2022). Identify affecting Incentives of investor participation in crowdfunding for social innovation(Case study: collective votive ). Journal of Iranian Social Development Studies (JISDS), 14(2 ), 169-185. SID. https://sid.ir/paper/1064050/en
  • Shabanibarzegar, L. , Rahnamay Roodposhti, F. and Mousaei, M. (2020). Proper Indicators of Capital Market Analysis, Based on the Financial Market Sociology Approach. Journal of Investment Knowledge, 9(34), 439-454.
  • Shafaei, R. , Ebrahimi Sarvolya, M. H. and Peymany, M. (2021). Motivating signals to participate in Equity Crowdfunding in IRAN. Innovation Management Journal, 10(2), 125-153.
  • Shahabi Shojaei, Gh., Rahnamay Rodposhti, F., Shahverdiyani, Sh., Nikoomaram, H. (2022). Provide a debt financing model for financial institutions and banks based on crowdfunding with a grounded theory approach. Journal of Financial Knowledge of Securities Analysis, 15(54), 23-36.
  • Shahidi, M., Keyvani, N. (2022). The nature of crowdfunding contracts in the Iranian legal system. Quarterly Journal of the Stock Exchange, 15(57), 81-110.
  • Sheikhzadeh, M. A. , Taghavifard, M. T. , Raeesi Vanani, I. and BamdadSoufi, J. (2024). Presenting a model to explain the factors affecting the willingness to donate online in line with the crowdfunding of non-governmental organizations. Public Management Researches, 17(63), 115-146. doi: 10.22111/jmr.2023.45000.5968
  • Hassan Kamallou, Ali Davari , MohammadHassan Ebrahimi Sarv Olia, Mohammad Azizi, (2023). Crowdfunding Model of Entrepreneurship Projects in Iran, Journal of Innovation Management in Defense Organizations, 5(4), 81-100. 
  • Kuti, M., & Madarász, G. (2014). Crowdfunding. Public Finance Quarterly= Pénzügyi Szemle, 59(3), 355-366.
  • Liu, Z., Ben, S., & Zhang, R. (2023). Factors affecting crowdfunding success. Journal of Computer Information Systems, 63(2), 241-256.
  • Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of business venturing, 29(1), 1-16.
  • Salomon, V. (2016). Emergent models of financial intermediation for innovative companies: from venture capital to crowdinvesting platforms in Switzerland. Venture Capital, 18(1), 21-41.
  • Zhai, Y., & Shen, W. (2024). Signaling theory in charity-based crowdfunding: Investigating the effects of project creator characteristics and text linguistic style on fundraising performance. Heliyon, 10(4).

 

International Journal of Financial Technology Perspective
Volume 2, Issue 5
Summer 2025
Pages 89-96