A Work-System Approach to Classifying Risks in Crowdfunding Platforms: An Exploratory Analysis

Crowdfunding has attracted much attention in the last few years because it has opened up new pathways for projects to obtain financing from individuals who are non-professional investors via the Internet. While risk occupies a central role in crowdfunding, this notion has been an unexplored area in the information systems literature. To close this gap, we contribute to the literature by identifying the main risks in crowdfunding platforms. Using the Work Systems Risk Framework, we analyze main risks in three equity crowdfunding platforms: Crowdfunder, AngelList and Seedrs. Our findings indicate that operational risk, project management risk, cognitive skill risk, IP risk, quality risk, legal risk and vendor relationship risk factors to be important to crowdfunding platforms. Findings from this study are relevant to platform owners and regulators in assessing the risks of crowdfunding platforms.