Capitalizing on the crowd: The monetary and financial ecologies of crowdfunding

TLDR

Crowdfunding is an internet‑based fundraising method that appeals to diverse audiences and is portrayed as an alternative, disruptive, democratizing economic space capable of challenging traditional banking, capital markets, and venture capital practices. The paper introduces the concept of “ecologies” from money‑geography literature to critically examine the crowdfunding economy and question its purported alternative qualities. By applying the ecology framework, the authors analyze diverse monetary and financial forms, avoid a binary capitalist/alternative dichotomy, and distinguish the varied crowdfunding ecologies that have emerged. The study argues that, when intermediation and credit‑debt relations are foregrounded, crowdfunding largely reproduces existing institutional and debt dynamics rather than disrupting them.

Abstract

‘Crowdfunding’ is a method of raising money and finance to capitalize projects of various kinds. Drawing on the networking capabilities of the internet and software platforms, those seeking project funding appeal to potentially diverse audiences who are collectively referred to as ‘the crowd’. What practitioners, advocates and policymakers typically identify within crowdfunding is its ‘alternative’, ‘disruptive’ and ‘democratizing’ qualities; that is, it is held to be a novel, digitally rendered economic space which has the capacity to challenge established funding practices in banking, capital markets and venture capital networks, offering a more open and egalitarian source of capital for economic, social and cultural entrepreneurship. The paper develops the concept of ‘ecologies’, drawn from the geographies of money and finance literature, to advance a critical understanding of the crowdfunding economy that is sceptical of its apparent qualities. First, by encouraging the analysis of diverse and proliferative monetary and financial forms, the concept of ecologies enables an understanding that avoids the binary opposition of ‘capitalist/alternative’ economic forms and which differentiates between the variegated crowdfunding ecologies that have emerged to date. Second, by foregrounding the intermediation processes and credit–debt relations of monetary and financial ecologies, it is argued that crowdfunding may largely replicate rather than disrupt the extant institutional and debt dynamics of funding practices. Third, by emphasizing the socio-spatial effects of monetary and financial ecologies, attention is drawn to the need for further research into the unevenness that mitigates against crowdfunding being as open and egalitarian as its advocates claim.