Choose wisely: Crowdfunding through the stages of the startup life cycle

Crowdfunding is attractive to startups as an alternative funding source and offers nonmonetary resources through organizational learning. It encompasses the outsourcing of an organizational function, through IT, to a strategically defined network of actors (i.e., the crowd) in the form of an open call—specifically, requesting monetary contributions toward a commercial or social business goal. Nonetheless, many startups are hesitant to consider crowdfunding because little guidance exists on how the various types of crowdfunding add value in different life cycle stages and which type is best suited for which stage. In response to this gap, this article introduces a typology of crowdfunding, the benefits it offers, and how specific benefits relate to the identified crowdfunding types. On this basis, we present a framework for choosing the right crowdfunding type for each stage in the startup life cycle, in addition to providing practical advice on crowdfunding best practices. The best practices outlined have shown demonstrable contributions toward achieving funding goals and are likely to prove valuable for startups.