Exploring the Implementation of Fintech Through Crowdfunding and an Appropriate Crowdfunding Model for Student Entrepreneurs

Abstract

The purpose of this article is to explore the implementation of fintech through a crowdfunding platform as a new source of entrepreneurial finance for student entrepreneurs in Malaysian higher education institutions (HEIs). This study aims to better understand the mechanism underlying the new novel concept of online funding known as crowdfunding, which serves as a new entrepreneurial finance tool that enables entrepreneurs to access capital more easily. Although online crowdfunding is a relatively new form of financing for entrepreneurial individuals primarily student entrepreneurs in HEIs, it plays a critical role in closing the gap in entrepreneurial finance. Therefore, this article describes the new entrepreneurial finance source phenomenon and proposes a model that includes three major categories and types of crowdfunding, with a focus on HEIs setting. To begin, the study discusses the three categories of crowdfunding that are available and used in Malaysian HEIs: (1) philanthropy, (2) patronage, and (3) investment. Secondly, the study’s major findings are as follows: within the three broad categories of HEIs crowdfunding, there are four distinct crowdfunding models: (i) donation-based crowdfunding, (ii) reward-based or pre-purchased crowdfunding, (iii) lending-based crowdfunding, and (iv) equity-based crowdfunding. Thirdly, the findings demonstrate how HEIs choose appropriate crowdfunding models based on the characteristics of their crowdfunding community. This study will benefit the interest of the community of HEIs (i.e., implementers, students or beneficiaries, faculty, and alumni) in gaining a better understanding of crowdfunding for entrepreneurial activities. Future research could focus on different study contexts (for example, secondary education) in Malaysia or other developing countries.