Financing Start-Up Projects in Circular Economy: Does Crowdfunding Fit?

Abstract

Financing a green and circular economy is a multi-level problem for entrepreneurs, businesses, local governments, and nations worldwide. Alternative methods of finance have become increasingly popular as a means of obtaining necessary funds due to the advancement of modern technology. Crowdfunding is one example of such a capital network. This chapter emphasizes the role of crowdfunding in financing start-ups oriented towards sustainable, green, or circular projects, exploring their likelihood of success. We hypothesized that start-up projects that use circular economy principles have a better chance of raising the desired amount of money from the crowd. We collected data for the study from the “Kaggle.com” open-source repository. Our findings show that campaigns oriented to the concept of circularity differ from others in several parameters. Campaigns with circularity elements target higher amounts of funds and raise more money. They are also more often chosen as a staff pick. Along with this, the results of econometric estimates support the conclusion that campaigns with circular orientation are more likely to be successful.