Adoption of Crowdfunding by Startup Entrepreneurs in Developing Context: UTAUT Model Application in Sri Lanka
Authors: Lasan Thanura , Sachitra Vilani 
Published: January 2025

Aim: Crowdfunding is a relatively new source of financing that enables an entrepreneur or a startup to obtain capital from many people, often through the Internet. This innovative financing method can democratize access to capital, allowing entrepreneurs in developing nations to bypass traditional gatekeepers and connect directly with potential investors or supporters. The appeal of crowdfunding for startup entrepreneurs in developing countries lies in its ability to democratize access to capital, bypassing traditional gatekeepers and connecting directly with potential investors or supporters. Despite its potential, the adoption and effectiveness of crowdfunding in developing countries like Sri Lanka are not yet fully understood. The objective of this research is to identify and analyze the key determinants of crowdfunding adoption intentions among Sri Lankan startup entrepreneurs.
Design: Unified Theory of Acceptance and Use of Technology (UTAUT) model used to develop conceptual framework of the study. Performance expectancy, effort expectancy, social influence, facilitating conditions and perceived risk included as the variables. The target population of this study was the individual startup entrepreneurs in Sri Lanka. 384 startup entrepreneurs were selected based on the industry they belong; including technology, agriculture, manufacturing and services. Multiple regression analysis used to test the hypotheses.
Findings: Out of 384, a disproportionate split exists between males and females as startup entrepreneurs. The overwhelming majority, 93% (n=357), were male, and 7% (n=27) were female. The largest group (41.1%, n = 158) described their ventures as early, focusing on product development or market validation. This was followed by 32% (n = 123) in the idea stage, 20.1% (n = 77) in the growth stage, and 6.8% (n = 26) in the scaling stage. E-commerce dominates the sample, representing 51.8% (n = 199) of the startups. Interestingly, 53.1% (n = 204) have considered but not used crowdfunding, while 33.6% (n = 129) have used it. Among the predictors, effort expectancy emerges as the strongest predictor (β = 0.301, t = 6.638, p < 0.001), followed by facilitating conditions (β = 0.285, t = 7.295, p < 0.001), performance expectancy (β = 0.261, t = 6.383, p < 0.001), and social Influence (β = 0.151, t = 3.536, p < 0.001).
Implication: Given the strong influence of effort expectancy, platform developers should prioritise user-friendly interfaces and simplified processes. Policymakers can use these insights to develop supportive regulatory frameworks that enhance the facilitating conditions for crowdfunding adoption.
Limitation and Future Research Suggestions: The findings can potentially be urban-biased and may not be generalisable to the Sri Lankan entrepreneurial ecosystem. Deeper insights could be obtained from research incorporating qualitative methods on entrepreneurs' decision-making process. A deeper understanding of cultural influences would be gained through cross-cultural studies that compare crowdfunding adoption factors in different developing economies.