Impact of Crowdfunding as an Innovative Entrepreneurial Finance on Nigerian Small and Medium-Sized Businesses' Funding Gaps (International Journal of Multidisciplinary and Innovative Research)

Summary

• The study conducts a systematic review of over 80 empirical and qualitative research papers from databases including JSTOR, Google Scholar, PubMed, and Research Gate to examine crowdfunding's impact on SME funding gaps in Nigeria.p.7
• World Bank projections estimate that crowdsourcing will be worth $300 billion by 2025.p.2
• In 2015, there were more than 1,300 crowdfunding platforms globally, representing a total sum of around $140 billion.p.2
• In Nigeria, medium-sized and small enterprises account for more than 90% of all businesses, yet they contribute only 1% of GDP due to inadequate funding.p.5
• A study on awareness in Nigeria revealed that only 24% of respondents reported being aware of crowdfunding.p.7
• A historical example of crowdfunding from 1884 involved 125,000 people donating over $100,000 to help build the Statue of Liberty following an appeal by publisher Joseph Pulitzer.p.2

Key insights

1. Crowdfunding provides an alternative to traditional bank loans by aggregating modest investments from online backers, helping SMEs overcome credit limits in regions like Nigeria.p.5
2. Small and medium enterprises in Nigeria make up over 90% of all businesses but contribute just 1% of GDP due to funding constraints.p.5
3. Fintech platforms enhance crowdfunding through AI-driven risk assessments, blockchain transparency, and secure payment processing.p.3
4. A survey in Nigeria indicated that 24% of respondents were aware of crowdfunding, highlighting a low awareness level despite its potential.p.7
5. Beyond capital raising, crowdfunding provides early-stage enterprises with market validation, business model verification, and marketing exposure.p.5
6. The efficacy of crowdfunding depends on several factors, such as the type of innovation, entrepreneur quality, and local regulatory frameworks.p.8
7. Establishing clear regulatory guidelines for equity and loan-based crowdfunding is recommended to limit fraud while preserving model flexibility.p.8