From the demand side, small businesses, start-ups, or small- and medium-sized enterprises (SMEs) typically face barriers in accessing finance from the traditional financial institutions such as banks. This is due to long waiting period, lot of documentation, collateral, financial records, creditworthiness, and the nature of new businesses. These barriers become more prevalent especially for developing countries. As such, alternative financing, i.e. crowdfunding, emerges as one of the alternative financing options for small businesses, start-ups, and SMEs. Online crowdfunding platforms allow small businesses, or start-ups to campaign their projects to raise funds from a larger number of investors through their small contributions . Based on the contract terms, payment, and nature of crowdfunding project, crowdfunding was recognized as either reward-based or donation-based crowdfunding before US Congress passed the ‘Jumpstart Our Business Startup Act’ (JOBS) Act in 2012 . In line with the JOBS Act, another type of crowdfunding, known as equity crowdfunding, was discovered. In equity crowdfunding (ECF), small businesses raise fund by selling equity stake to individuals without going through regulatory requirements guided by securities commission in issuing stock publicly . Besides equity crowdfunding, debt-based crowdfunding also allows small businesses to raise fund, but instead of selling equity, they borrow money from the crowd with the condition of interest and repayment of loan. From the supply side, investors act as an important source supplying fund to a crowdfunding project for its successful venture. Investors inject their fund either lending money or buying equity stake via crowdfunding platforms. Although small businesses, or start-ups, or SMEs find this type of funding as convenient and lucrative, the concern is mainly from the supply side that what causes investors to invest in crowdfunding. Because investors are less protected in crowdfunding investments; and the survival rate of small businesses and start-ups are lower .
Factors influencing investment decision of a crowdfunding project grab attention to academia, and a number of factors have been documented including financial and non-financial motivations, extrinsic and intrinsic motivations, crowdfunding platforms-related factors, perceived risk of crowdfunding, and regulatory issues [8, 15, 17, 25, 33, 34]. These studies, however, concentrate mainly on the attributes of crowdfunding platforms influencing crowdfunding investment. Attributes of crowdfunding platforms alone may not adequately explain one’s willingness to fund a crowdfunding project. Furthermore, these studies ignore non-attributes of crowdfunding which might influence funding a crowdfunding project. With regard to non-attributes of crowdfunding, financial training and managing a bank account may influence an individual’s willingness of crowdfunding investment. Financial training has been used as a predictor in different contexts, for example, investment decisions or stock market participation [7, 11, 19]. Financial training helps individuals to obtain knowledge and skills on basic terminologies of different investment instruments and money management as well. This may influence one’s tendency to invest in alternative investments such as crowdfunding. Adding to that, managing a bank account, has been used mostly for financial inclusion  and it is suggested to have link with alternative investment decisions . Both financial training and managing a bank account as non-attributes of crowdfunding are incorporated with the attributes of crowdfunding platforms to fill the research gaps. Moreover, existing studies on crowdfunding focus less attention on one’s preference for a crowdfunding model despite a variety of crowdfunding model available for investment. Hence, factors leading to preference for a crowdfunding model are unknown. This study also attempts to fill this gap by understanding the effect of both attributes and non-attributes of crowdfunding investment on preference for a crowdfunding model. Particularly, the study examines whether attributes of crowdfunding (perceived attractiveness of lending in crowdfunding, perceived development and innovations of crowdfunding, and perceived risk of crowdfunding) and non-attributes of crowdfunding (financial training and managing a bank account) influence the proportion of amount willing to invest in crowdfunding and the preference for a specific crowdfunding model.
Crowdfunding market in Malaysia is considered as a context of this study. While prior studies on crowdfunding have gained much attention in developed markets, only a handful of studies have concentrated on emerging markets. Due to different regulatory requirements and guidelines for the crowdfunding markets, factors that drive investors’ investment decisions on crowdfunding may be different from those factors found in developed or other markets. In this case, Malaysia as a developing country is considered given that SMEs and small businesses face a large funding gap. The financing gap for Malaysia’s micro-SMEs is estimated at around $21.5 billion . Crowdfunding can aid in minimizing this funding gap. Equity crowdfunding was introduced in Malaysia after releasing the guidelines on recognized market operators in December 2015. The funding amount and the number of successful campaign have been impressive in Malaysia. For example, funding amount raised via equity crowdfunding was almost double from RM54.91 million to RM110.26 million in between June 2019 and June 2020. Simultaneously, the number of successful campaign has increased from 64 to 106 within the same period of time  (Securities Commission Malaysia, 2020). Individual investors are the majority contributing to the crowdfunding campaigns . Therefore, the success of crowdfunding largely depends on individual investors who provide fund to the platforms. Without the support of investors, crowdfunding platforms are not able to close the financing gap. To encourage individuals for the growth of crowd investing, it is utmost important to focus on the factors leading to crowdfunding investment. Asian Institute of Finance shows that while 25% individuals were aware of crowdfunding, only 11% had invested in a crowdfunding project, in 2015 . Lack of knowledge and investment may result in lack of funding and thereby keep rising the funding gap. Therefore, to ascertain the growth of crowdfunding industry and to motivate individuals, it is necessary to understand how investors in Malaysia perceive the attributes and non-attributes of crowdfunding and their impacts on investment in crowdfunding and preference for a crowdfunding model.
Survey methodology is adopted to collect the data from young working individuals in Malaysia on the attributes of crowdfunding (perceived attractiveness of lending in crowdfunding, perceived development and innovation of crowdfunding, and perceived risk of crowdfunding), non-attributes of crowdfunding (financial training and managing a bank account dummy), the proportion of amount willing to invest in crowdfunding, and the preference for a crowdfunding model. The data are collected from 297 usable responses and analysed using ordered logistic and multinomial regression models. The results show that when investors perceive an easy investment process of crowdfunding and receive financial training, they are more willing to invest in a crowdfunding project. On the other hand, when investors perceive the risk involved with crowdfunding project to be lower, they are more likely to invest in a crowdfunding project. About the preference for a crowdfunding model, the results show that investors managing a bank account are more likely to prefer debt-based crowdfunding model. Among the control variables, age, education level of the respondents, and city residence have a positive significant influence on the crowdfunding investments, while Malay ethnic group is significant but shows lower willingness. Regarding control variables for a preferred crowdfunding model, Malay ethnic group has less preference for equity-based crowdfunding and male respondents have less preference for debt-based crowdfunding.
An individual’s willingness to fund a crowdfunding project and preference for a crowdfunding model are related to information asymmetry, the theory of cognitive evaluation, and self-determination. George Akerlof was the pioneer to study information asymmetry theory. According to Akerlof’s view, information asymmetry occurs when one party has better information than another in a transaction . Crowdfunding function involves a high level of information asymmetry because of information gap between project founders (i.e. borrowers) and investors (i.e. funders), and this leads to well-known adverse selection and moral hazard problems . Agarwal et al.  examined the market dynamics of crowdfunding and explored the problems of moral hazard and adverse selection. In the light of this theory, less information asymmetry would increase an investor’s willingness to fund a crowdfunding project. The opposite would occur when there is a greater level of information asymmetry. This paper assumes that soft information including perceived attractiveness of lending in crowdfunding, perceived development and innovation of crowdfunding, and perceived risk of crowdfunding would decrease information gap and lead to fund a crowdfunding project. Besides, financial training and managing a bank account may help individuals to minimize the information gap and lower the tendency to make adverse selection. This, in turn, causes higher willingness to fund a crowdfunding project.
As different types of crowdfunding models (e.g. equity- and debt-based crowdfunding) exist as the recognized market operators, it is possible that individuals may have preference for a specific crowdfunding model. In this regard, cognitive evaluation theory focuses on extrinsic motivation (i.e. monetary rewards), whereas self-determination theory considers factors that may facilitate intrinsic motivation [12, 13]. Allison et al.  extend the explanation of cognitive evaluation and self-determination theories in the context of crowdfunding. They illustrate that an investor’s (i.e. funders or lenders) extrinsic motivation is more crucial to provide fund than an intrinsic motivation when entrepreneurs/founders focus on future extrinsic rewards. Through the lens of extrinsic and intrinsic motivations, the paper considers perceived attractiveness of lending in crowdfunding, perceived development and innovation of crowdfunding, perceived risk of crowdfunding, financial training, and managing a bank account as motivating factors to prefer a particular crowdfunding model.
Existing literature can be divided into two strands. One strand of literature concentrates on attributes of crowdfunding platforms in influencing one’s intention to invest in a crowdfunding project. Another strand of literature covers studies on different types of crowdfunding models. Gerber et al.  investigate what motivates funders to lend in crowdfunding, using semi-structured interviews of US-based creators and funders. Analysing qualitative data with Nvivo, they find that seeking reward, supporting project creators, trust and creative community affect investors’ lending in crowdfunding. In the next study, Gerber and Hui  examine funder’s willingness to invest in the crowdfunding community. Conducting semi-structured interviews among participants in the USA, they document that funder’s willingness to fund a crowdfunding project is driven by the desire to collect rewards, helping other people, supporting causes, and be part of the community. Distrust on project founder’s use of fund adversely affects lending in crowdfunding platform. Cholakova and Clarysse  investigate whether financial and non-financial motivation affect one’s decision to invest in equity crowdfunding and reward-based crowdfunding. Conducting a survey of 454 participants from a platform in Netherlands, they find that non-financial motivation has no significant role in crowdfunding and further they document that investment in equity crowdfunding is a positive determinant of keeping a pledge. Using a survey response of 169 individuals in Malaysia, Wasiuzzaman et al.  examine if both intrinsic and extrinsic motivations affect willingness to fund equity crowdfunding. They report that aesthetic value, trust, emotional value, and novelty have impact on equity crowdfunding investment, while financial motive has no impact on one’s willingness to support equity crowdfunding. With respect to Shariah-based equity crowdfunding, Rahman et al.  attempt to investigate Shariah-complaint equity crowdfunding for small business development in Malaysia using a survey of 200 entrepreneurs, and find that the ease of use of crowdfunding affects raising capital in crowdfunding. Ghazali and Yasuoka  emphasize that perceived development and innovation of crowdfunding play a significant role for one’s willingness to invest in crowdfunding in Malaysia. They investigate the awareness and perception of SMEs and start-ups towards Malaysian crowdfunding relying on a sample of 30 respondents from different companies. These authors report an insufficient level of awareness about crowdfunding as an alternative financing. Despite that a majority of respondents have positive perception towards the development of fintech. They report that fintech crowdfunding would become an alternative source of financing for start-ups and SMEs, and crowdfunding would have an easy investment process. Overall, the respondents have positive reaction to the improvement of crowdfunding in Malaysia. Perceived development and innovation of crowdfunding are suggested to affect one’s probability of funding in crowdfunding.
Using a mixed method technique in France and UK, Pranjivan  indicates attractiveness of lending in crowdfunding, which includes higher financial return, interest about specific companies, disappointment of traditional finance, advantage of a new form of investment in order to support the growth of crowdfunding activities, and maintain market confidence. Attractiveness of lending in crowdfunding is shown as one of the important determinants of crowdfunding investment. Risk of crowdfunding also gains attention in the literature. Bradford  explains perceived risk of crowdfunding as the risk associated with the investment in crowdfunding such as fraud and information asymmetry. As the risk of crowdfunding may vary across one project to another, Renwick and Mossialos  investigate the risk of crowdfunding in a health project using semi-structured interview in the UK. They demonstrate five types of economic risk of crowdfunding in health projects including budgetary dangers, indistinct administrative systems, wasteful need setting, danger of misrepresentation, and issues of responsibility. Using a questionnaire survey, Wasiuzzaman  investigates perceived risk of investing in equity crowdfunding projects and finds that perceived information quality and regulation decrease the perceived risk of equity crowdfunding. On the relationship between perceived information quality and perceived risk of crowdfunding, regulation acts as a significant moderator.
Hoegen et al.  focus on a range of variables to investigate the factors influencing one’s decision to fund a crowdfunding project. Apart from crowdfunding-related attributes, an individual’s financial training may influence the tendency to loan a crowdfunding project possibly because receiving financial training causes individuals to explore more about alternative investment including crowdfunding. Talla et al.  explore the effectiveness of the training programme in increasing crowdfunding awareness. Using experiment among Palestinian students, they demonstrate that training programme is effective to increase awareness of crowdfunding. In turn, crowdfunding’s awareness may lead to funding a crowdfunding project. The significance of training has also been observed in other disciplines. Rahman and Akhter  report that investment in training positively predicts bank performance in Bangladesh. Anjum  stresses on the practical training in the form of internship programme for business students to improve personal and professional development.
Before investing in a crowdfunding project, one needs to understand different types of crowdfunding model, which have different functions and activities. Existing literature illustrates equity-based crowdfunding, debt-based crowdfunding, reward-based crowdfunding, and donation-based crowdfunding [20, 28, 32]. Meyskens and Bird  investigate different types of crowdfunding model and the value of social culture. They suggest that equity-based crowdfunding model is used when there is high economic value and low social value; debt-based crowdfunding model is used if there is high social value and high economic value; reward-based crowdfunding model is used if there is low social value and low economic value; and finally, donation-based crowdfunding model is used if there is high social value but low economic value.
At this point, the following gaps have been identified by reviewing the existing studies. Studies that have investigated attributes of crowding platforms (e.g. perceived attractiveness of lending in crowdfunding, perceived development and innovation of crowdfunding, and perceived risk of crowdfunding) fail to consider other possible factors that may impact one’s crowdfunding investment. In this case, non-attributes of crowdfunding may play an important role in crowdfunding decisions. For example, financial training and managing a bank account are suggested to impact crowd investing decisions. These factors, however, are not addressed in crowdfunding literature. Besides, even though crowdfunding model has different classifications based on the equity, debt, reward, and donation, the preference for a crowdfunding model and its determinants remain unexplored. This study intends to fill the above research gaps by extending the attributes of crowdfunding with the non-attributes of crowdfunding, and their influence on the willingness to invest in crowdfunding and preference for a specific crowdfunding model. There are until now less studies that have focused on young working individuals in Malaysia to fill the above knowledge gaps.