Effect of Crowdfunding and Angel Investment on the Performance of Small and Medium Enterprises (SMEs) in North Central Nigeria

Abstract

Despite the increasing recognition of Small and Medium Enterprises (SMEs) as vital contributors to economic growth and employment in Nigeria, the extent to which emerging alternative financing mechanisms such as crowdfunding and angel investment influence their performance in North Central Nigeria remains unclear. This study therefore investigated the effect of crowdfunding and angel investment on the performance of SMEs in the region. A survey research design was adopted with a sample size of 398 SME owners and managers, and data were collected using a structured five-point Likert scale questionnaire. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results revealed that both crowdfunding and angel investment exerted significant positive effects on SME performance, though crowdfunding demonstrated a stronger influence. The study concludes that alternative financing mechanisms play a crucial role in enhancing SME growth, innovation, and sustainability in North Central Nigeria. It recommends that policymakers and financial stakeholders strengthen the regulatory and awareness framework for crowdfunding while promoting angel investment networks through incentives and capacity-building initiatives to improve SME access to finance and long-term performance.